Imagine if grocery stores forced us to choose one of a few dozen grocery "insurance" memberships to buy groceries, and negotiated directly with the insurers. No prices are labeled in store, they just detect whatever you take and send you a bill at the end of the month. (Differing brands of the same food product are not available in store of course.) Individuals are charged 3-100x more per product than negotiated rates, but can't find out until afterwards. Grocery "insurance" would then become a necessity. People would trade away disproportionate amounts of their salary to get good grocery benefits from their employers, i.e. to not get price-gouged by virtue of being an individual on the market. Stores would run discount programs for the very poor, which they could point to when people get outraged (as drug companies do now.) When politicians would threaten the system, grocery stores would fund ads about the "long lines" and limited food availability that would occur. Instead laws would get passed reinforcing the system by making sure everyone gets grocery insurance, as its a necessity (and it would _be_ a necessity).
I'm not saying that health care _could_ be exactly like grocery stores, with many alternatives, transparent pricing, and customers making the final decisions, but that it would have to be much _more_ like grocery stores to call it a free market. What we are working with now is just a system of pricing cartels supported by fear and lobbying. It needs to go.
This is a good analogy because it highlights the important problem. Insurance companies are incentivized to have healthcare prices increase so long as they get a discount. Why? Because it increase their value to the consumer to the point of necessity.
Also they are only allowed to make a certain profit margin: cost plus. One way to grow your profits is for the underlying cost to increase.
"The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That's good in theory, but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here's how: Let's say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more."
From the consumer perspective, calorie needs are stable and predictable, fundamentally different from what insurance is for.
From the supply chain’s perspective, there is a very sophisticated insurance system to smooth out issues with crop yields, weather, etc. called the commodity futures market.
Both of your points are true of healthcare. No, not everyone will break a leg or need major surgery, but everyone gets old and dies. Flu shots come out at the same time as pumpkin spice lattes. From an aggregate standpoint I would wager healthcare needs and costs are predictable and forecastable, just like commodities.
Can you explain to a Non-American what forces this system of employer insurance onto the US? Why don't independent insurance companies emerge that offer other models of insurance?
There's both historical and insurance-business (underwriting) reasons.
The history: wage-price controls implemented during WWII as labour was taken up by the military and companies had to find some basis other than pay on which to differentiate. Benefits, including health care, were excluded from wage consideration.
Insurance itself is the business of assessing, managing, and sharing (or "pooling") risk. In the case of health care, the typical costs that a given population will face are predictable based on age, gender, and various exposures. Given a sufficiently large number of people, a group or policy cost can be assessed. Along with other groups, this results in pooled risk.
I'm not an actuary, but "large pool" risk is fairly low, I suspect it's on the order of 30 or so people. Smaller pools can be formed (or more likely: aggregated to form larger ones), down to a small number of members, as few as a handful or so.
The idea being that in any given pool, what's called "adverse selection" (people specifically looking for insurance due to high risks) are less likely -- you're dealing with the average population.
In individual markets, all of this becomes much less predictable, and/or the transaction and administrative costs of individual insurance simply add up.
Since a large share of the population works, or lives in a household with someone who does, allocating healthcare group insurance through employment has more-or-less stuck in the US.
The fact that it provides yet more leverage and control by employers over employees is another factor, of course.
Source: A long time ago in a galaxy far, far away, I studied this at uni. Plus more recent experiences / exploration.
I don't think the size of the pool is that relevant. The pool from the perspective of insurance company is all insured people, so it doesn't matter whether it's a company of 5 or 5 individuals joining, it's still a huge pool.
Adverse selection is the big reason. An individual signing up for insurance can be used as a signal that means "individual is sick" or "individual is likely to need insurance soon". If a company policy covers all employees (or all employees above a certain level), the signal is "person works" which is orthogonal to "person will need insurance" (in fact, it's probably slightly anti-correlated, a.k.a. "person is fit enough to work").
I think people who are already sick should be covered by a kind of charity (or social services). It doesn't make sense to ask insurance companies to insure people who are already sick.
An alternative is to have random-lot assignments, at least so long as you care to preserve a private, for-profit, insurance sector. That is, members of a given population is assigned, at random, to a set of insurance providers, who have minimum performance and obligation standards.
Otherwise, the socialised version already exists, in most industrialised countries, in some form or another. Within the US, Medicare for the elderly, Medicaid for the poor and children, and in many states, "high risk pools" which are state managed.
More generally, a problem is that the bulk of health benefits do _not_ accrue from direct or acute medical treatment, but from public health and preventive measures, _especially_ well-mother, well-baby, early childhood, municipal sanitation and environmental measures, and general (workplace and elsewhere) safety provisions. Insurance companies of and by themselves don't address much of this.
Great comment. I’ll agree and add that the pool of people working full-time itself serves as a beneficial selection process for the insurance pool. It includes (expensive) births but excludes a lot of expensive debilitating conditions so long as that condition precludes someone working full-time.
One major factor in the US is that, from the perspective of an employee, employer plans have a massive tax advantage compared to anything the employee could buy outside their employer.
If your employer pays your insurance premiums, this doesn't count as taxable income for you. So you effectively have a choice that looks like:
- Your employer directly pays $200/mo for your insurance, or
- Your employer pays you $200/mo as cash, the government takes $40 (adjust as appropriate for tax bracket) out as income taxes, and you have $160/mo left over to pay for health insurance.
I can't really speak to the political forces that keep this subsidy in place, though.
So if you insure yourself privately, you can not deduct it from taxes? That would be an issue then, but seems easy to fix. Why isn't that part of the health care discussion?
So the choice from earlier is actually more correctly stated as:
- Your employer directly pays $220/mo for your insurance, or
- Your employer pays you $200/mo as cash and pays $20/mo directly to the government in payroll taxes, totaling $220/mo. Then the government takes $40 (adjust as appropriate for tax bracket) out of your paycheck as income taxes, and you have $160/mo left over to pay for health insurance.
The payroll tax issue would apply even if you could fully deduct the $200/mo from your personal taxable income.
> seems easy to fix. Why isn't that part of the health care discussion?
If employers can deduct more for health insurance than private people, it seems unfair and rigged.
Payroll taxes are another matter to me, that's mostly window dressing. Either employer pays the tax to the government, or pays it to employees and they pay it to the government. The outcome is the same.
I think payroll taxes exist mostly to hide the amount of taxes they pay from the population.
Big business likes the level of control. Employees are limited in their job mobility, especially to small companies. It restricts competition, it also suppressed wages.
Big business in the U.S. gets what it wants, and if they didn’t want employer provided healthcare it would be gone, but it’s not gone so it means they like it.
If there was universal healthcare in the U.S. there would be an explosion of small business. Most small business can’t afford to provide healthcare, and if you have an existing health condition there is no guarantee that the plan from your new employer, if they have a plan, will include your doctor, or that they agree with the old doctor’s treatment plan.
If insurance costs $500/mo, either your company can pay the premium for you directly, with no taxable event for you; or, they can give you $500 more as a part of your salary, but the government will take $150 of that (or whatever, depending on your tax bracket), and then you have $350 to cover a $500 expense.
Individuals can deduct medical/insurance payments on their taxes every year, but: 1) the rules are complicated with some payment minimums that mean a lot of people couldn't take the deduction at all, and 2) you have to come up with the extra $150 every month for 12 months before you get that money back (since the US tax system is pay-as-you-go with per-paycheck withholding), which is a real burden for many Americans.
Alternatively, your company can give you $715 per month, the government will take $215 of that in taxes, and then you have $500 left over to pay your $500 insurance bill, but: 1) your company would very much rather pay $500 instead of give you $715, and 2) that $715 is actually not a hard number, but will vary depending on each employee's personal tax situation, which can change throughout the year, and your company likely doesn't care to deal with that (this is less of a big deal, since it could be outsourced to a piece of software written by a payroll company).
Why do Americans put up with this? Many of them (most?) just don't understand how this all works, and so don't even know they're getting screwed. Many have no concept of systems in other countries that handle this better, in part because they don't travel and don't have friends or family abroad, but more because of concerted misinformation campaigns around any kind of changes to our health care system that would threaten the incumbents.
I guess big business doesn't "prevent" alternative insurance companies; there are plenty of available options for insurance that individuals can purchase on their own. But it generally costs more (because you're not an HR benefits person negotiating on behalf of your 500-, 1000-, 50000-person company), and you end up with the bad tax consequences described above.
If you're an enterprising individual who wants to set up an alternative insurance company that charges very low premiums for great plans, you run into the problem of having no negotiating power with health care providers, who are used to charging high prices because the traditional insurers will pay them.
You can adjust your withholding amounts by filing form W-4 with payroll, so that in-year cashflow issue is largely a red herring. (It’s solvable now and would become standardized/automated if the overall system changed.)
Other (more concerning) items you itemize are the real blockers.
In practice, most people do not actually understand how the boxes on W-4 translate into withholding amounts. There'd be a lot of trial and error involved if done manually.
Regardless, there's a reason why I marked that issue as "not a big deal" -- because it isn't -- the other issues I mention are the meat of it.
The issue you appear to have marked as not a big deal is calculating the gross-up that would be required to keep employees whole not the per-paycheck withholding cash flow issue, which you labeled a “real burden” for some (unless I’m misreading your post). I agree both are manageable and would be automated if things switched models.
Another factor that hasn't been mentioned yet is adverse selection.
Individual health insurance plans do exist, but few healthy people buy them, so the pool is sicker than average, so the insurance costs more, so even fewer healthy people buy the plans, and so on.
Employer group plans cost less in part because the pool is generally healthy.
Consumers using grocery insurance would have no real say or insensitive in what groceries they get - it doesn't matter if all they need is some chicken and a cheap wine. All the grocery store sells are filet mignon and Dom Perignon, and that's what everyone gets.
When my kid gets a deep gash, disfiguring an eyebrow or messing with an important finger, I'd be willing to pay extra for a surgeon to sit there with a microscope putting all the little capillaries and nerves back together. I'm offered a staple, or some glue, or maybe a couple stitches. No, I really don't like zig-zag eyebrows and stiff numb fingers.
Solving the problem of care that a person can’t afford is a completely different issue than fixing the problem of routine affordable care being exorbitantly expensive.
According to Wikipedia, there are only .5% of all physicians in the US who can perform neurosurgery. So it's probably safe to say the demand for brain surgery is much higher than the supply.
This incentivises people to become doctors that perform such complecated procedures as it takes a lot of time and a lot of money to be able to do those things.
If you were to force doctors to perform work on people that can't afford it, then presumably they will earn less money. If they earn less money, there is less incentive to do that kind of work as they will pick something easier and more profitable.
You will end up with fewer people to do brain surgery.
There are two parts here that are not clear, and potentially misleading for folks unfamiliar with how doctors are minted in the US. The first is the cost to the individual to become a neurosurgeon. The second is around the supply side of the health market.
First, to become a practicing doctor of any sort one first completes med school then a residency and (depending on specialty) fellowship. The med school part is more or less the same for all physicians from your GP to brain surgeons to psychiatrists. Many folks take out loans to cover med school.
The residency and fellowship parts are paid. In practical terms this means a person becoming a neurosurgeon needs no more loans or upfront cash than a person becoming a GP. (I assume everyone is familiar with opportunity cost so will leave that part unsaid)
As an aside, much of the funding for these programs comes from the public (via Medicare).
All this means, the cost of becoming a neurosurgeon is about the same as any other specialty.
As for the supply side entry to med school and selection to residency programs are the big bottlenecks.
Med schools are accredited via doctors trade bodies. This means doctors (not market forces) decide how many new folks can become doctors.
As previously mentioned, residencies are largely funded via Medicare already. However, the number of residents has been capped since 1996. In that period of time the US population has grown by about 60 million (25%).
You may have been familiar with all this, but I think the context is important for discussing market solutions to healthcare — there are a lot of distortions around the US having anything resembling market behaviors.
I suppose that the amount of doctors graduating each year is below the supply-demand equilibrium, and this us because the artificial supply-side limitation. Most doctors are overworked, despite their very high throughput and medical offices' efficiency.
This gives doctors a way to pay out their colossal student debt, though!
This article suggests that there is a gap, and is widening. Only 1 to 61,000 people. It also mentions that they tend to be clustered in more populated areas, leaving some places without any coverage.
If money were the only incentive tons of people would become school teachers because school teachers make significantly more than the average. Other incentives, like having to deal with kids and get a degree, is what keeps people out.
Entry-level teachers earn over $40,000 according to Payscale. Median income for the lower class is about $25,000. Anecdotally, it's not unreasonable to become a millionaire in real estate by the time you retire on a teachers salary.
That is true, but if you're the type of person that likes to help others it's much easier to become a teacher than doctor.
Also, if you are a doctor and your primary motivation is helping people, wouldn't you want to help many people with simple problems, than few people with highly complex problems (which most likely have a higher risk of failure)? There is already a shortage of doctors doing the easy stuff.
I just don't see the incentive for doing difficult procedures other than with money.
> Also, if you are a doctor and your primary motivation is helping people, wouldn't you want to help many people with simple problems, than few people with highly complex problems (which most likely have a higher risk of failure)?
Your analysis completely falls flat here. Not all doctors are motivated by the same things and yet most of them would consider their primary motivation helping people.
Neurosurgeons are a prime example. They would very much prefer few complex cases (not everyone gets a brain tumor thankfully) as their way to maximize benefit rather than manage cholesterol meds for 100s.
Speciality surgeons by their nature are motivated by a certain degree of risk.
The incentive for doing difficult procedures is often because they are challenging. Compensation for doctors in the US isn’t fully correlated with difficulty either... with no offense to my dermatology colleagues making more than most general surgery sub specialists.
> Not all doctors are motivated by the same things and yet most of them would consider their primary motivation helping people.
That's fair. I probably over-emphasized the money part of it.
> The incentive for doing difficult procedures is often because they are challenging.
We can assume that since doctors aren't doing this for free or at least cheap already, that they require at least some amount of compensation. To return to my original point, if you force doctors to perform procedures on people that can't afford them, and the amount they receive is less than they want, then there be a greater shortage of such doctors.
> Compensation for doctors in the US isn’t fully correlated with difficulty either... with no offense to my dermatology colleagues making more than most general surgery sub specialists.
Not directly anyway, it's probably more supply/demand. Low supply of neurosurgeon means high cost. Whether that's from artificially suppressing the supply of these doctors or because it's very challenging is up for debate.
I'd guess dermatologists make so much because people are more willing to spend money on that sort of work.
No, but alternatives and transparent pricing allow us to weigh alternatives and to have an adult conversation about all of us will die someday (save singularity). Then we get to negotiate about what it's worth to extend that date of death forward 1, 2 .. N days for $N .
Next we look to that "scorecard" (bank account) which is the value provided but not called upon and get to see if we can call in enough "favors" to afford the healthcare
As I see it, there are two solutions. Either all medical costs are "free" for the consumer and paid for via a tax, or you have a proper insurance system where consumers participate in a transparent market for non-urgent medical care and buy insurance only for things they can't afford. The latter needs some extra regulations for emergency care where you can't compare prices.
This would be great if health choices were being made by rational consumers. But when I break my leg, I want services quickly and I don’t have time or energy to price compare ambulances. Healthcare is not a marketplace that will have compassionate outcomes if we allow deregulation.
Yes, because in countries where health care prices are 3-100x lower it is total anarchy. People lie on the streets for hours, browsing price comparison websites while bleeding out.
In a just world, nobody would go hungry, nor would anyone die prematurely or suffer needlessly due to lack of care. We can obviously afford both, in this country, just like they can everywhere else in Europe or Canada. So this entire argument about insurance is a straw man.
It’s not the doctors who set up this world. It’s people who want to pay less taxes, but blame doctors.
Why shouldn't doctors and the medical industry take the blame in the US? They artificially limit the supply of Doctors in the US and have the audacity to claim that building more medical schools will ruin their already lucrative careers.
Regarding Europe, which I happen to have friends all over: it's not exactly as rosy.
European countries do have more doctors per capita, which is good.
They don't have nearly as much resources in the system, though. Come to a doctor with a bad cough, get a prescription for Paracetamol. You got to have a pretty bad infection to get a prescription for an antibiotic. Endure a long discussion with a doctor to renew an antidepressant prescription made in another country.
Lines are pretty long, too. Wait for two weeks to get an appointment about your coughing and sneezing. Have a deteriorating chronic condition and be prescribed painkillers and be told to wait for a year. You're not yet feeling so bad as the people who are currently being treated and who take up the capacity; these people also waited a long time.
All are examples from my friends dealing with the health systems of Netherlands, Sweden, Germany.
The US system has a ton of issues, but I still take it over these European systems. Have I been floored by medical bills? Yes, from my dentist, from my wife's heart surgery. But I somehow managed — and we both received instant, high-quality help.
Even the Russian system is better, or used to be back in the day. You could buy local insurance, and the choice was reasonably wide. You could pay upfront in cash, and the sums were manageable — Moscow definitely not being a cheap city, more expensive than many EU capitals.
Of course, I'm talking from a perspective of a well-earning software engineer who lives in metropolises, not in countryside. Still I think that either system has downsides, and the European systems are not superior, but just suck differently.
* If I have a cold, I go to a doctor without appointment and if I'm unlucky, I have to wait for 2 hours. Usually it's 30-60 minutes.
* If I have a specific thing that requires a specialist, I may or may not have to get a referral from a general practitioner first. Most specialist don't really need it, but for an allergy test I needed to get one. This puts me at 2 x 60 minutes wait time.
* Costs are close to nothing. Drugs will cost a little, up to around 6€ for a pack of meds. I have to pay 2€ for a doctors visit due to the specific insurance provider I have, which is okay. I needed to pay 12€ for an x-ray because it wasn't an emergency.
* My austrian insurance provider payed more than half of a hospital trip I had to take during vacation in Taiwan. Total cost of the trip to the hospital without insurance was 130€, which included check by the doctor, pain medications and some medical equipment. I had travel insurance, but I didn't use it because I was left with a bill of just 60€.
* A few times I was angry because a doctor only took 5 minutes time, prescribed some pain meds and sent me on my way. Told me all I can do right now is wait until it gets better. Turns out, that was the case.
* If it's an emergency, you get treated immediately.
I wouldn't trade our system for anything. It's not perfect, but it's perfectly fine.
Exactly the same experience here in Belgium, only the doctor visit costs are way higher. Instead of €2 it's more like €25 per visit or I think €35 for home visits.
I don't have experience with costs abroad so can't comment on that.
What is correct is that in Belgium you also don't get antibiotics because you ask for them. Only when the doctor deems it necessary you will get it.
In the USA, at least in my experience. If I have a cold I still had to make an appointment which would be 2 to 3 days later. I got around this by joining a doctor in a clinic and they'd let me see any doctor if my doctor wasn't avaiable but i'd have to sit in the waiting room for 1 - 2 hrs.
In Japan I have had mixed experiences:
Good:
* It's relatively cheap. Apprently the government sets prices. The government offers medical insurence. It costs based on previous year's income. i've paid as little as $15 a month and as high as $300. I don't know the range. It only covers 70%. My employeers have provided insurance that covered more.
* Fast. There are no appointments or a least I've never made one. Just walk in, usually no more than a 20 minute wait. Did have one long wait 1998.
* Some pretty good tech. Had back problems once. Got an MRI immediately (Japan has/had ?x more MRI machines than USA). Last week had an unusual pain in neck, went in, got immediate endoscope pictures inside neck.
Note that in Japan, unlike the USA, hospitals are a place you can just walk in for a cold. (you can also go to small clinics and private doctors). The advantage of going to a hospital is they have more specialists and equipmnent. The disadvantage is sometimes longer waits and probably not as close. I only bring that up as a contrast to USA where a hospital is someplace you don't go unless it's an emergency or surgery or something else really serious.
Bad:
* Bar to be a doctor much lower. Have had several very quack doctor expeiences in Japan. Have not yet had a quack doctor experience in USA
* Unclean. Have been to several facilities that seemed unclean to me. Machines that looked like people had coughed on them for years and had never been cleaned. Not all places but enough the experience has stuck out. No idea what that's about but just surprised since my experience in the USA was that medical services are or at least appear spotless.
Unknown:
* Nurses require no training (or so I was told by a nurse). You just go apply for job like a fast food job. Is that better (lower cost) or worse (less training).
> Unclean. Have been to several facilities that seemed unclean to me.
The thing I like about it is that you can just leave the unclean facilities behind and find a new doctor, and it will cost you exactly the same as the old one.
Replace ‘Japan’ with ‘metro cities in India’ and its almost the same. I can’t still fathom why there would be no walk in facilities for ailments like cold.
I still remember my shock when in US I realised from a colleague that for my cold I need to wait because I can’t walk in and need to take an appointment.
I noticed recently in the USA places like Walgreens you can see a doctor for colds. That seems like a great idea to me. I guess that's similar in Thailand and maybe Malaysia.
I don't get this either. If I have a cold, I just take acetaminophen a couple times a day to suppress the symptoms until it goes away. Sure, if you're elderly or have an autoimmune deficiency, you may want to see a doc for everything, but that's not that common.
(Amusingly, I was in London a few years ago and came down with a cold. One of my local colleagues told me about this amazing thing called paracetamol that was just magic and would make me feel better. I was astounded that we didn't have it back home in the US... until I looked it up and realized it's just acetaminophen under a different name.)
YES?! What the hell? Especially considering, the kind of sinus clearing pills which are forbidden (classed as a narcotic) in Sweden, they handed out in jars like candy at the US office.
There's no reason to visit a doctor for the common cold. Stay home and get some rest.. Do you take your car to the dealer or local mechanic to put air and washer fluid in your car?
>There's no reason to visit a doctor for the common cold.
That's such an american thing to say. A flu can be swine flu and fever can be Malaria or Dangue and one day delay can mean losing your life, so people in many parts of the world take fever and flu seriously.
I live in Eastern Europe so it's a bit like a third world country compared to Germany or Sweden.
But let me tell you, it's not like you describe it at all.
First of all, you don't get antibiotics just because you think you need antibiotics.
And then, there's the private sector which has normal prices. And they treat you like a VIP.
>The US system has a ton of issues, but I still take it over these European systems. Have I been floored by medical bills? Yes, from my dentist, from my wife's heart surgery. But I somehow managed — and we both received instant, high-quality help.
I think you are mis- characterizing the European systems. I say systems as each country is different - some better than others for sure, but from what I've seen from both the US and European systems, I prefer the ones where my family going bankrupt does not depend on one of us getting seriously sick or not.
The cost of healthcare per capita is way higher in the US, and outcomes generally poorer (see infant mortality rates for example).
The state of insurance for health in the US has far reach ing, society altering negative effects too which are often not considered. My sister in law would like to stay at home for a few years woth her young kids taking a career break - but cannot as she'd loose her insurance, despite her husband's income being enough to support them, it's the insurance holding her back. This absolutely would not be an issue anywhere in Europe I can think of.
It's strange to hear about not getting an insurance if staying at home. That's exactly what my wife did when our child was small. She had the same insurance as me, because I was able to add her to my employer-sponsored insurance policy.
What really sucks is to be a small-scale entrepreneur, a garage-stage startup founder. You're cash-constrained, and there's no employer to give you a cheaper insurance plan. Obamacare is said to have helped recently.
In this case she is a teacher in CT with very good benefits, but her husband, while on a decent salary has pretty terrible benefits, so she could not switch to his insurance is she stayed at home. Crazy situation when you think about it
Wait for two weeks to get an appointment about your coughing and sneezing.
Here in the UK you can get an appointment to see your GP the following day most of the time, and we have walk-in clinics for same day check ups if you don't care which doctor you see. Availability varies a lot around the country but its mostly good.
This was not the case in Bristol when my GP took 2+ weeks to see me for the first time, then upon arrival, pawned me off on a nursing assistant rather than a doctor, then happily prescribed antibiotics for an “STI”, and then ignored my asks for a follow-up appointment for 2+ more weeks.
It turned out to be cancer. Original complaint stated when trying to book the appointment was “I have a testicle the size and hardness of a golf ball”.
Through that now, but the NHS is dysfunctional compared with U.S. healthcare. I have several relatives with bad hips or knees in U.K. who got prescribed stronger and stronger painkillers for >6 months because the waiting list for surgical intervention in their cases was so long.
> but that it would have to be much _more_ like grocery stores to call it a free market.
Except not really. If I'm poor I can choose to eat nothing but ramen. I might not like it, it might not be the best for me, but it'll keep me alive. If I'm poor and have a heart attack I can't choose to just take tylenol, I do need that bypass surgery.
The ability to walk away from a transaction entirely is what makes the market free, and because health care is life or death there is simply no way to make it a free market, you are compelled by your life to make (many? most?) of the transactions.
There are plenty of medical conditions where there are several options for how to manage it. With insurance, people usually choose based on risk of failure or complications, recovery time, etc. Without insurance, someone might choose primarily based on price, and a poor person might go for the cheapest option. For some non-life-threatening issues, a poor person might refuse treatment if the cost for even the most minimal intervention is too high.
This is obviously not what we want -- ideally, we want some reasonably-high minimum level of care so people don't have to choose between, say, starvation and permanent disfigurement -- so, as the parent says, we don't want health care to be exactly like a grocery store, but this kind of thing would be more like a free market for health care.
(And even in your example, you still have to buy and eat that ramen. Sure, you don't have to pay for steak, but you have to buy something. You can't just walk away from the transaction entirely.)
Have you ever actually tried to do this? It is hard.
A family friend, a smart guy with excellent insurance, was recently diagnosed with Parkinson’s Disease. Since I’m a neuroscience researcher, he asked me for advice. Despite working in an immediately adjacent field, at a Parkinson’s Centre of Excellence, with access to experts and tons of relevant training and literature, I found it very difficult to make a recommendation, even between the options his doctors had already laid out. I can only imagine how hard this would be if I had to consider the price of these treatments too.
No one said it was easy. Regardless, I'm not sure this particular example is relevant: you cherry-picked something that actually _is_ hard to decide about.
The problem is that there is not a single reason that healthcare is so expensive. Even if you list the top 15 reasons, you still have to apply the "5 whys" to each of them to find root causes and possible solutions.
- Doctor's are paid too much... why?
- Well they need to be paid a lot because medical school debt is 250k or more... why?
- Medical schools/the AMA are artificially limiting the number of students and residents for their own ends (keeping wages and scarcity high) so they need to charge a lot... why?
- I honestly don't know.
But the current political climate in the US is incapable of dealing with any kind of multifaceted problem.
One thing that will not make healthcare less expensive is "Medicare For All". It will just shift the bill to different people. Now, you can argue it's the morally correct course of action, or those people who will be forced to foot the bill (upper middle class taxpayers) are more capable of doing so, but you cannot credibly claim with a straight face that it will make anything cheaper. In fact, the opposite will occur.
(I don't want to hear one thing about negotiating power. That is a debunked line of reasoning. Medicare/Medicaid cover more people than many single payer systems in other countries, and their costs are still outrageous)
> One thing that will not make healthcare less expensive is "Medicare For All". It will just shift the bill to different people. Now, you can argue it's the morally correct course of action, or those people who will be forced to foot the bill (upper middle class taxpayers) are more capable of doing so, but you cannot credibly claim with a straight face that it will make anything cheaper. In fact, the opposite will occur.
Having every person under the same plan that has the negotiating power of 327.2 million people will definitely drive costs down. Don't want to pay what the government says it is going to pay? Good luck finding customers then, because the government is bargaining on behalf of all of the customers in the US.
People who say this stuff are the same people who proclaim there is no solution to a problem that the only occurs in the US. Literally, every Industrial Nation has addressed this problem for much lower costs with better out comes.
> Having every person under the same plan that has the negotiating power of 327.2 million people will definitely drive costs down. Don't want to pay what the government says it is going to pay? Good luck finding customers then, because the government is bargaining on behalf of all of the customers in the US.
So my mom and her boyfriend are both under Medicare now, as was her late 2nd husband. My mom and I had both generally been Medicare For All supporters (with some reservations in my case), but I got an earful recently about how people who support Medicare For All don't know what they're in for...
The problem is with Medicare's system of billing codes. Sure, if a hospital doesn't like the reimbursement rate, they can't go find other customers. But they can - and will - find other procedures. Not making enough money from that doctor's visit? Well, we better do some tests, then, just to be sure there's no lurking problem. Oh, there was a spot on that X-ray - more tests. We didn't find anything serious, but there was a benign growth that you probably should get taken care of. Don't worry, it's a quick procedure, it could potentially be done as an outpatient but you might want to make it an overnight hospital stay just to be sure. Shit, you contracted an infection in the hospital? Gotta extend that stay until you're better.
Basically, if they can't raise prices, they will find ways to do more procedures. My mom's description of what modern American health care is like as a senior citizen is truly terrifying - basically they manufacture illnesses so that they can cure them and bill for it.
I came to the conclusion (reinforced by every corporate scandal you read about on HN, and my time in the financial and tech industries) that the problem isn't health care per se, but something is deeply broken in American culture. People don't give a shit about their fellow Americans as people, only as dollars, and as a result no matter what system you institute it will end up being gamed in harmful ways. The U.S. is falling from a high-trust to a low-trust society, and there are few if any ways to bring it back.
>But they can - and will - find other procedures. Not making enough money from that doctor's visit? Well, we better do some tests, then, just to be sure there's no lurking problem. Oh, there was a spot on that X-ray - more tests. We didn't find anything serious, but there was a benign growth that you probably should get taken care of. Don't worry, it's a quick procedure, it could potentially be done as an outpatient but you might want to make it an overnight hospital stay just to be sure. Shit, you contracted an infection in the hospital? Gotta extend that stay until you're better.
Right. This is exactly what we want (save the MRSA). The problem with the American healthcare system isn't just that it's expensive; it's expensive and still has worse outcomes than in other industrialized countries. Part of the reason for that is that patients cut off their care for financial reasons, and not because they've reached a satisfactory conclusion about their state of health.
The way you describe the mindset isn't a function of Medicare per se, but of the fact that there's still a profit motive involved, even when receiving Medicare funding, in a system that is largely privately-funded. Maybe releasing that source of pressure and competition and scarcity will change the way people on both sides of the doctor-patient relationship approach their care.
This sounds like an ignorant view of getting proper healthcare.
There are more things to check because older people have more medical problems, therefore more tests, more treatments, etc.
We would have to see what would happen if you gave a 25 year old medicare in this country, I doubt it would be the same experience that an elderly person would have.
There is a very strong correlation between which additional tests are requested and what the hospital can charge under Medicare reimbursement codes. (My mother's boyfriend is a former doctor, and intimately familiar with the health-care system from the other side of the table.) Both of them are also in fairly good health (my mom has no pre-existing conditions, her boyfriend has some issues with his back but nothing unexpected for an 80-year-old), and were definitely not treated like this while on private health insurance.
What do you think would be different between 25-year-olds and elderly people? The incentives are the same in both cases, produced by the billing code.
My point is that people are being treated for health problems that are not problems because the provider can then bill Medicare for it. That's not going to go away because there are fewer health problems; the whole issue is that it doesn't matter if there are health problems, the provider will find or create some that they can bill for.
Oh, okay. I can't speak to that specifically, that seems like an unethical healthcare provider if they're genuinely performing unnecessary procedures. They should probably be reported to the state medical board.
I think there is also a matter of what you view as 'necessary medical care'. Preventative medicine is vastly cheaper (and more effective) than reactive procedures to fix things that have become serious issues.
(It makes practical sense, right? You properly maintain your roof so it doesn't leak, that's cheaper than fixing the damage caused by the leaking roof).
This is particularly true with older people who have higher incidence of cancer, heart disease and major organ problems.
So yeah, they may send you for a battery of tests that they can charge the state for, but it might be preventing a much more expensive (and traumatic/painful) surgery down the line.
But people seem to focus on the collective bargaining and price aspect of everyone having proper healthcare, which is weird because it shouldn't be about that, it should be about increasing the efficiency of the overall system and quality of life of the people involved.
You're not wrong they are deeper problems, but you say these things as if M4A would cause them when they are happening now. I was recently asked by a dentist if I wanted a special kind of cleaning. She then nervously admitted that it wasn't necessary, but she "wanted to make sure." M4A won't fix all the problems, but it would definitely make things better, and hopefully, lead to people demanding more.
But why those nations have lower costs isn't so simple. If you remove all profit and admin overhead from the US system, its still something like $5000/person more expensive than other countries (I think that that was vs Canada).
A large component of healthcare cost in the US is simply healthcare use. We are deeply, deeply unhealthy with 75% overweight rates and absurd levels of pre/diabetes, which are the largest comorbidities of all, and comorbidities of each other. Costs will never be comparable until overweight/obesity rates and usage are comparable too. They are not.
High prices in the US are very unfortunately largely explained by usage, and no amount of profit-reducing or cost cutting will work unless you are cutting usage itself:
It's not just about cutting usage, it's about cutting the right kinds of usage as well.
Lots of Americans, anecdotally, skip out on regular checkups or checking on minor ailments because of anxiety about paying copays. And then eventually something that could've been easily treated when detected initially blows up into an expensive ER visit or requiring specialists.
A good chunk of this could be solved if we stopped using the ER as the catch-all emergency net for literally everything.
In the UK the NHS negotiates prices for drugs. NICE have to approve all drugs and if a drug is too expensive, the manufacturer either has to lower the price so that the benefit outweighs the cost, or they lose a large market.
This is why hand waving away "bargaining power" ignores one of the sources of high costs.
The other is that our doctors are mostly either employed by the NHS, or employed by a private provider who is paid by the NHS ... yes, there are doctors who do private only work, but they are fairly small in number.
Perhaps our student loans system also helps - fees are £9k a year, but you start paying them back at 9% of income over £25k ... so it's essentially a graduate tax and they are fully written off after a set number of years if you don't pay them off.
The difference in drug spending between countries amounts to a small fraction of overall healthcare spending. $1200 a year in the US versus $900 in Switzerland or $800 in Germany, Canada, and Japan.
It's incidental what the numbers are. Given how effed the US system is, I would fully expect that $1200 being spent on the entirely wrong things, like a few super expensive drugs, and a lot of antibiotics which should have been dirt cheap getting a ridiculous markup, or on Oxycontin.
Zero people from other nations come to the US to save money on health care. The ones that do come are looking for specialists for some exotic condition, not because they love the level of care or the price tags.
And do you think those specialists would exist here if we had medicare for all? no, evidence: all those other countries that have that and no such specialists.
This is a great point more people should make. There’s nothing “America first” about preserving the inefficiencies of a system just so that very wealthy people from everywhere can get care and leave (and ultimately specialists would anyway still exist, even if their treatments aren’t covered by Medicare)
if everyone had that specific knowledge, there would be no specialists. no, different countries develop different specialties. famously, Kobe Bryant went to Germany (a country with national healthcare) to get a knee procedure from a specialist.
It's not a one way street, though. Americans go to other countries like Canada or Cuba for health care, including, famously, GOP Congressman Paul Ryan.
Cop cars aren't collectively bought. For one its on a state by state basis, and then in some states individual PDs are responsible for their own vehicles, they just get a budget to buy and fix them.
That means they usually end up in an imbalanced power relationship of small 20-30 person local PD force approaching Ford / GM asking for their police cruisers.
Some states, of course, do collectively bargain their service vehicles like that, the USPS is probably the most prominent example of collective bargaining on a national scale - the post office bought 140,000 of them over 7 years for below consumer grade vehicle pricing. Even nowadays when they are reevaluating replacing their fleets it only averages out to about 41k per truck for a new model and that includes having to refit garages and post offices to accommodate them.
I'm also pretty sure there are licensing deals between US auto makers and various state bureaucracies to price control service vehicle costs, but its still never like a private automaker is getting an order for 80k cop cars from one entity.
What other goods is the US Gov the sole buyer of, for which the sellers can't easily shift to other customers? Cop cars clearly doesn't apply, as carmakers have other customers. Doctors, hospitals, and pharmaceuticals will face true monopsony, which means sell at gov rates or quit entirely. Some suppliers will quit entirely, but most won't.
Sure, the government can say they'll only pay half as much as they do now, so providers will only provide half the care. Have you ever actually done any government procurement? Saying the government can just wave a magic wand and lower prices because "they said so" will only hurt the quality of care patients receive in the US.
The 'quality of care' you receive in the US is entirely dependent on your wealth and it's only the upper class that actually benefit from it.
You know what quality care I got as a poor person? Nothing, because my family couldn't afford it. I was given the privilege of going through highschool and college with teeth quite literally broken down to the gumlines and abscessed because it was either that or not being able to have a future.
I'm tired of hearing nonsense about quality of care because for a lot of people the quality is set to null.
Every time I read arguments online of people defending the American system, I almost always get hints that they are wealthy people, usually because they admit they can actually afford the care instead of essentially going broke over it. Healthcare debt is the leading cause of personal bankruptcy in the US, so it is statistically true that it is too much for the people below the median. Even for people in the middle class.
Genetics and diet seem to be large factors in dental health.
Poor people tend to not be able to afford healthy foods and will often eat foods high in sugars, which are terrible for your teeth. Perhaps their parents couldn't afford toothpaste regularly, or floss at all, or could only replace their toothbrushes once a year or two. Perhaps the parents work all the time, and don't have as much time or energy to instill strong daily tooth hygiene habits in their kids or police their brushing.
As an anecdotal data point, a friend of mine always goes for regular dental checkups, and brushes and flosses daily, but still has tartar buildup and gum issues. He had to get a deep-clean, and was in pain and bleeding for several days afterward. I (foolishly) avoided going to a dentist for many, many years, and in that time did a mediocre (at best) job of daily maintenance. When I finally started seeing a dentist again, I got away with two minor fillings (my first ones, and they didn't even numb me at all for the drilling) and a deep cleaning, where I had no bleeding issues and the pain was gone within a few hours (aside from tenderness around the anesthetic injection sites). My gums aren't in great shape, but are better off than my friend's. Unknown as to why the outcomes are so different. I can't imagine what my friend's teeth would be like if he didn't go to the dentist and didn't have good hygiene habits.
Thailand. Some of the best medical care of any developing nation, at around 10% of the price for most procedures. A night in a very clean, modern Thai hospital can be less than $100/night.
> Having every person under the same plan that has the negotiating power of 327.2 million people will definitely drive costs down. Don't want to pay what the government says it is going to pay? Good luck finding customers then, because the government is bargaining on behalf of all of the customers in the US.
That explains our highly competitive, low profit margin defense industry.
Peter Attia discussed this issue pretty extensively Mart Makary on his podcast. It seems like most of the medical community agrees this would drive down costs in the near-term. The issue is what happens to care, choice, and price long-term in a single-payer system.
I think is we force the disclosure of what every company or individual pays for specific treatment or medication, this transparency alone should be a big step in the right direction to normalize costs.
There are 60 million people on Medicare. If you can’t negotiate with twice the population of Canada I don’t think the problem is not enough beneficiaries.
You know Medicare sets separate prices from normal insurance, right? See [1]. For most procedures, there's the "we make up a number to charge to insurance companies" price and then there's the negotiated Medicare price with associated billing codes.
It amuses me when people think that letting the government run something will make it more efficient. I do not disagree there is tremendous waste in the current system. I strongly believe that expanding the government's role will only make it worse.
In my opinion, the best yardstick for a health care system is how long you have to wait to be treated for cancer. By that yardstick, countries like Canada and England stack up quite poorly when compared to the USA. Canadians don't come to the US to save money on health care. They come to the US because they have an expensive potentially fatal medical condition, and they might not survive a six month waiting period for treatment.
The wait time for cancer treatment for the poor in Australia is the same as the rich, whereas the wait time in the US for the poor is "have you made funeral arrangements?"
Having had a family member just go through the Australian health system for breast cancer, her treatment was on a time-scale of a few weeks, but she had the time and was being checked often. In the US, we'd be making funeral plans and bucket lists because they'd not be able to afford treatment.
The wait time thing is a total canard. Countries like Canada do have long wait times for things that do not require immediate attention. As an example, often you make your appointment for a physical a year in advance. And then, people who like to twist the facts into a false narrative point to the "year long wait time" to get a physical. Nonsense.
>In my opinion, the best yardstick for a health care system is how long you have to wait to be treated for cancer. By that yardstick, countries like Canada and England stack up quite poorly when compared to the USA
I don't know who told you that about Canadian healthcare, but it's simply not true.
When my mom was diagnosed, she underwent surgery within days, and was getting chemo/radiation as soon as was medically safe.
>In my opinion, the best yardstick for a health care system is how long you have to wait to be treated for cancer.
To quote a famous movie: well, you know, that's just like uh, your opinion.
Why would the wait time (and not treatment outcome, or rate of occurrence) for one group of diseases be a good metric for evaluating the overall performance of a healthcare system?
In my opinion, it's a horrible metric. To give a car analogy, the 0 to 60 time in snow while towing is surely a metric, but there are other things to consider as well when you are buying a vehicle.
>[Canadians] come to the US because they have an expensive potentially fatal medical condition, and they might not survive a six month waiting period for treatment.
A lot to unpack here! But, first, the TL;DR is no[1].
More specifically:
1)Cite sources on people and England and Canada having six-month waiting period on cancer treatments in cases where urgent intervention is deemed necessary ("might not survive").
2)Look at the number of those cases.
3)Compare and contrast with similar cases in the US when people don't get treated because they don't have the money.
4)Look at the numbers again.
5)Look at how many Canadians do come to the US (in absolute numbers, as a percent of the Canadian population, and as a percent of patients seeking the particular treatment).
6)Stop perpetuating misleading opinions.
I won't cite the numbers - that's your homework when making bold claims. I found the numbers hard to find, which means to me that your claims are likely not substantiated.
Rather than pull up the specific data regarding US/UK/Canada, I'll just reply with a link to a general overview of how free (but rationed) government provided health care compares to what exists in the USA:
You realize there multiple working examples of a national healthcare plan right? Including one very obvious example to our northern border. You're arguing like this is some huge open ended problem like climate change.
Almost every developed country has a national system that provides excellent care for far more reasonable costs. Except the US, of course.
I'm starting to realize why America will never get its shit together. Too many people without facts in the debate, believing they are correct, without any evidence at all.
Switzerland doesn't have nationalized healthcare and Singapore has a hybrid model. In a ranking of top 5 healthcare systems, on average you will find some that are nationalized and some that are not.
One thing that is unequivocally a mistake in healthcare in the US is making it a "free market" and then having employers pick the insurance for their employees.
In a sense, wasn't the choice to not negotiate drug costs itself the result of a negotiation? I believe the way it works is that health insurers and providers threaten to fund fear-mongering attack ads against politicians who support laws that don't like. The politicians cave and carve out rules for the industry.
So it's not that the Medicare drug care costs aren't negotiated, its that the chance for lower costs was traded away by Congresspeople of the past (many of whom aren't in office anymore) in exchange for campaign funds. Not literally a campaign fund check, of course, but countering an attack ad costs campaign money that they could be spending otherwise.
> (I don't want to hear one thing about negotiating power. That is a debunked line of reasoning. Medicare/Medicaid cover more people than many single payer systems in other countries, and their costs are still outrageous)
It is illegal for Medicare to negotiate drug prices. That needs to be fixed.
I was going to comment the same thing. Pointing to Medicare/Medicaid as examples for why drug negotiation doesn't work is an impressively incorrect line of thought.
Private buyers won't just automatically pay more, so they can't "just raise prices".
Of course prices will still be raised, but the point is that Medicaid drug spending is rather directly linked to negotiated prices for drugs, not just based on whatever the manufacturer asks.
> Medicare/Medicaid cover more people than many single payer systems in other countries, and their costs are still outrageous
I appreciate your reasonable breakdown, but I don't understand this one. I've seen many reports talking about how the costs of basic supplies and procedures are dramatically higher in the US (and vary wildly within the US). Things like X-Rays, MRIs, etc, being off by an order of magnitude or more (though I'm sure if the median price differences are less dramatic than the extreme examples, the results I vaguely recall said there was still a noteworthy difference)
How does this not indicate some fundamental difference between the US and other "developed" nations outside of the factors you list above? (Honest question)
MRI is like 5x cheaper here (I paid less than 300$ for both knees) without any insurance just doing it privately. The reason I think is that it's easier to open a medical business here, people can't sue for damages (or they can but will never be awarded anything substantial), there is less regulation you need to comply with and the doctors and technicians make less money. All this makes it possible to provide medical services at reasonable price.
We have public single payer healthcare. The quality is low and lines are long (it's several months at least if you would like to get free MRI using that option and then like a year or more to get actual arthroscopy). Still I think shitty but somehow working public option keeps private providers in check because they can't charge arbitrary amount as there is always shitty option to fall back on.
To give you an idea about prices here if you go private: typical doctor visit: 40$, dentist (one tooth filling): 60$, arthroscopy: 1000$, full blood panel with about everything under the sun included (hormones, vitamins, minerals, insulin response etc.): 200$. The quality of service is low but higher than in major metro areas in US (according to my sister who lives in NYC).
This is Poland so low wages are surely one component that makes cheap services possible but I think not the only nor the most important one.
> The quality of service is low but higher than in major metro areas in US
This is always my question when I hear about service being "great" or "terrible" - relative to what? I honestly have no idea if my healthcare is "good" or "bad", because I've only experienced one system. I have plenty of complaints, but there are also lots of things that don't go wrong that could.
People complain about lines in other countries, but me/my family has had waits of 2-6 months getting appts for new ob/gyn, dermatologists, rheumatologists, sleep specialists, etc. Mental health experiences have been worse until we stopped trying to do it through insurance at all and just ate the costs. Involved treatments (e.g. at a hospital, even outpatient) involve multiple, pricey bills.
So when you say "quality is low", what does that MEAN?
I am assessing it in two ways. One is comparing it to other services: do they have modern equipment? Is bureaucracy a burden? Do people working in those services generally act like decent human beings? Are doctors/technicians competent? Is it easy to imagine a service at higher quality and how much would it cost? Using those criteria I think medical services in my country are low quality, especially the public option.
Another way is comparing to other countries. I have family living in US (both immigrants from different countries, now US citizens, having children there) and very close friends living in Switzerland. Both lived in Poland for many years and often visit so we are all in good position to make comparisons. Both US and Poland suck in comparison to Switzerland in all imaginable respects. They comparison between US and Poland comes out about equal at least according to us.
I think we agree. I'm just saying it's not a single fundamental difference between the US system and other systems, it's myriad differences that combine to make things way more expensive in the US.
But you eliminate negotiation as one of those factors using other countries as a reasoning. I've never heard that this is debunked (though I don't expect that it is the sole factor). Do you have sources?
Or did I misunderstand and you are just saying that negotiation (or lack thereof) alone isn't responsible for all the cost headaches?
You can also branch off here: because malpractice insurance is insanely expensive. Why? Because people sue over absolutely everything. Why? Because lawyers in this country are vultures.
If anything is overly expensive, you can usually track it back to insurance costs somewhere, which can typically be tracked back to the fact that we live in a litigious society.
Malpractice insurance is < 3% of total healthcare cost in the US. Considering malpractice occurs and has an actual cost, not even all of that is wasted.
At the same time doctors are given immense authority and depending on circumstance very limited oversight in their administration of care. People will go to three different practices and get radically different diagnosis and prescriptions. There are substantive and documented biases amongst medical practitioners as well, including how women are substantially less likely to be treated for a heart attack because many doctors don't believe their reported symptoms.
Medicine is also a precipitously massive field of study and in the same way a programmer isn't expected to know every language and technology - hell, most are not expected to understand even the full breadth of the standard library or code base they are presently working in - few doctors are actually as informed as they like to act. A lot of it is cultural, doctors are supposed to be authoritative, but the US has a very problematic medical culture of assumed authority that has people putting blind faith in doctors who "trust their instincts" and end up being completely wrong and hurting people for it.
Remember that medical malpractice lawsuits are still overseen by a judge. If there is a settlement, there often was a mistake made. The solution to malpractice costs is not have doctors make mistakes but to reduce how often mistakes happen.
A lot of those remedies require a reform of culture though, and that is one of the hardest challenges to approach. And don't think I'm just "blaming" practicing doctors here, its structural to the industry and is why MDs are being put on 18 hour highly stressful shifts where its unbelievable they make as few mistakes as they do in such unreasonable working environments.
This is compounded by our high medical costs. People who sue often have chronic medical conditions as a result of the malpractice, and the settlement is basically paying them for their extortionately expensive medical care.
How would you like to strictly regulate damages for that? What do you think is reasonable for that situation? How about if someone is rendered disabled or impaired? Marred? Dead?
People like to point to malpractice and lawyers and blame it all on that. Every actual study I've read totals the cost of tort liability (insurance, law suits, damages, etc.) at about 5% of total health care spending. Significant to be sure, but not the bogey man people like to make it out to be.
> I don't want to hear one thing about negotiating power. That is a debunked line of reasoning. Medicare/Medicaid cover more people than many single payer systems in other countries
That's... not true at all. In European countries, single payer covers almost everyone, and the government has negotiating power to drive down prices. This is proven workable and effective in many places, including Canada. Literally every other industrialized nation has solved this problem.
If you don't agree with universal healthcare, fine, whatever, but don't go throwing around clearly obvious falsehoods.
This is like one of those "we can't solve it" arguments like gun violence where literally every developed country except for the US has solved it.
> One thing that will not make healthcare less expensive is "Medicare For All".
A large part of what makes American per-capita healthcare costs so outrageous is how much is treatment rather than prevention. Because going to a doctor is so expensive people just don't go, and then mundane problems that could have been fixed with at worst a routine surgery end up in an emergency room on life support expending a hundred thousand dollars of resources a day to correct.
Thats in addition to substantive productivity losses incurred by people being sick all the time without the financial resources to actually fix their ailments.
Even when you have health insurance the absurd deductibles mean you can't see a doctor anyway without being out the equivalent of half the months food or your entire utility bill.
It is absolutely imperative that any nations people have affordable access to medical professionals before they are suffering ill from all the things they noticed were off but didn't want to become indebted over.
> Medicare/Medicaid cover more people than many single payer systems in other countries, and their costs are still outrageous
This is not a fair comparison. Medicare/Medicaid predominantly covers the elderly. You can't compare their price spend to a mix including many more healthy people covered in single payer systems in other countries.
There is a WHY (or at least a general why):
Obfuscation.
- lack of clarity on competitive pricing
- obfuscation by adding multiple layers in buying process (broker - insurance - claims adjuster - hospital)
- obfuscation through too-many-options syndrome (Obamacare versus Medicare versus state-driven healthcare versus emergency-only healthcare)
- lack of clarity when being billed (getting several bills from several different departments)
There's also the problem of insurance companies being a for-profit enterprise that answers more to stockholders than to patients.
This is the result of "free market" idealists at work. Health is something that everyone needs, so businesses want a piece of the big pie by trying to wedge themselves somewhere in there. Only massive government overhaul can fix this.
But that's the return (net margin, not gross cost that the insurance company is adding to the whole system). You have to look at gross, which is way higher (~5x).
> One thing that will not make healthcare less expensive is "Medicare For All". It will just shift the bill to different people.
One of the myriad reasons healthcare in the US expensive is the middlemen who stand to profit from taking as big a cut of your premiums as possible, while paying for as little care as possible. Without this fundamental force driving healthcare prices it doesn't seem clear to me at all that prices would stay the same. Your dismissal of single-payer plans like M4A glosses over the largest proposed change to the structure of medical billing.
>One thing that will not make healthcare less expensive is "Medicare For All". It will just shift the bill to different people. Now, you can argue it's the morally correct course of action, or those people who will be forced to foot the bill (upper middle class taxpayers) are more capable of doing so, but you cannot credibly claim with a straight face that it will make anything cheaper. In fact, the opposite will occur.
Isn't the NHS or Canada's system better? How are they different from 'Medicare for all' ?
> > so they need to charge a lot... why? - I honestly don't know.
> Does anybody else know the answer to this?
They don't _need_ to. But they do charge a lot because they can -- they know that doctors can afford to pay it using future earnings. And now we're back up the stack in terms of explaining high costs.
Part of it is the Baumol effect as explained by Tabarrok et al [1]. But I believe most of it is due to the nature of the healthcare industry when there are no govt-imposed limits on prices: there is no incentive for hospitals and doctors to lower their prices, since they are not in competition with each other for patients. The insurance industry is just passing the cost to the employers. I could even argue that this explains some of the wage stagnation -- costs went into health insurance premiums.
In many cases US doctors make 2x (or more if you're a specialist) than their European counterparts. The outcomes are not materially better in most cases.
(Also, I'm just picking on one small reason for healthcare costs, the point is that is just one of many)
The salaries given relate back to expenses paid. Doctors in Europe broadly don't pay anything for medical school and thus don't have a mcmansion of debt to recoup after graduating.
Developers throughout Europe find their salaries regularly pegged to cost of living wherever they are. In the US salaries are distorted for 2 reasons - most major global tech companies are here and thus there is higher demand for developers here than elsewhere - and two that those tech companes congregate in the most expensive cost of living places on Earth due to NIMBYism and Americas broken city planning culture.
In general almost everyone in the US is paid, comparatively, more than their European counterparts because their raw income has to afford to cover potential medical expenses that nobody else abroad has to contend with. Americans also get much reduced food, utilities, and housing benefits compared to the broader first world.
> Developers throughout Europe find their salaries regularly pegged to cost of living wherever they are.
Even if that is the case, if you compare salaries for mid-level developers in cities like Miami and Amsterdam, I think the pre- and post- tax situations are pretty drastically different.
Software Engineers in the US often make 2x as much as our European counterparts, yet we don't have any artificial limits on the number of people able to study Software Engineering. I'm not disagreeing with you the point on the AMA, but even if they removed their limits -- would many more people want to enter the field? It seems extremely intensive, not only during your education and residency, but on the job too. 12+ hours days, multiple days per week? No thanks.
>In 2011, 43,919 students applied to medical schools. However, only 20,176 of those applicants were accepted into at least one medical school. In other words, 54% of applicants got rejected to every medical school they applied to.
Even if we remove the bottom 10% or even 20% of un-accepted individuals (who we might assume, unfairly or not, are not cut out to be doctors) an absolutely significant number of people would enter the field.
I wonder what’s the graduation rate for medical school? You’d think it should be difficult enough to flunk out 2/3 of the students (like engineering), but I’m guessing that is not the case.
I also used to assume it was a field full of highly intelligent people, but when I told this to my cousin who is a doctor he laughed and said something to the effect of "The medical profession selects for mediocrity", and went on to point out that being a doctor is a fairly rote profession; most of their work does not involve creative problem solving or critical thinking. It is a very challenging profession in terms of having to learn an enormous body of material, work grueling hours in dangerous and unpleasant environments, and deal with customers who are definitionally unhappy to be your customer. But it's a set of challenges that a fairly wide portion of the population can rise to.
It's practically 100%. Once you're in, they'll do everything in their power to graduate you (legitly). Every incentive they have points at a perfect graduation rate.
EDIT: In the US, anyway. Things are different in, say, Caribbean medical schools.
I read someone mention that French medical schools are easier to get into but the graduation rate is much more like engineering schools. About 1/2 to 2/3 of students drop out or fail. Said the result was French doctors were functionally better in general than US ones and happier.
Since I don't have any experience with French medical schools I don't know if that is true or still true.
I do have experience with US doctors and about half of them are just phoning it in every day.
Software engineers are in such high demand in the US that we can't train supply fast enough. In addition, most tech companies tend to be clustered in areas with the highest cost of living in the country. Those two things combined are what serves to push salaries up.
If there were more doctors, they wouldn't have to work 12+ hour days. They are overworked and have to pack patients in because of the limited supply of doctors.
Speaking for Canada rather than Europe but I imagine the argument is mostly the same. The supply and demand ratios are different. Canada has very few pure software firms like Google or Amazon compared to the US, so there is significantly less competition for the engineers that work there. This drives prices down - or rather, prevents prices from being driven up.
What I've noticed is that everybody in the system cries poor and believes that someone else is gouging us. But the system is so labyrinthine that nobody can figure out where the money is actually going. And every group (e.g., doctors) has an investment stake in the other groups (e.g., medical and malpractice insurance companies), or is a partner in an LLC that makes money by buying a machine and billing for its use. Etc.
The likely answer is: They are all gouging us.
One potential benefit of a single payer system is simply being able to untangle that mess and put every player on a reasonable footing. For instance, make medical school free, but then doctors get to work for the government for a decent professional salary. It might even change the mix of people who are willing to become doctors -- more middle class. The primary expenditures of the medical system should be materials (capital and consumable like drugs) and salaries.
And what's more - look at the UK where we spend half as much per capita on healthcare and achieve broadly similar results. Yes, if you get a sporting injury you're going to be waiting 6-8 weeks for physio, but if you have a heart attack, cancer, are in a serious accident there is no wait.
There are gigantic pools of funds out there in quasi-private insurance, Medicare, and Medicaid. Costs explode. Similarly, gigantic pools of funds are available thanks to subsidized student loans that cannot be bankrupted. College costs explode. Being uninsured is terrifying because the individual healthcare buyer is competing with deep-pocketed insurers and government programs who are much less price-sensitive.
Healthcare is expensive because the patient is not the customer. Insurance is going crazy because insurance is legally compelled to pay for oil changes and basic maintenance, so insurers must accept more exposure.
You're forgetting that medicare for all also comes with a lot of promises about free education. The artificial barriers for education will be slowly removed and the supply will quickly match up the demand.
The solution isn't going to fix everything immediately, but it IS required for a full solution.
Except now starting a training program does guarantee you'll have students that don't need a ton of money to pay off their loans. It becomes less risky.
Part of the problem is that Medicare/Medicaid pays market prices. Its a pricetaker not a pricesetter, because of poor regulation, in spite of its larger position. If you pay market prices, expect inflation every year on top.
>Medical schools/the AMA are artificially limiting the number of students and residents for their own ends (keeping wages and scarcity high) so they need to charge a lot... why? - I honestly don't know.
The AARP advocates for social security... why? - I honestly don't know.
Imagine if you put the teamsters in charge of infrastructure spending, every road in the country would be under construction perpetually. It would be illegal to shovel your own driveway without paying someone in the union to sit in front of your house and supervise.
Haven't doctor's historically had high salaries? Becoming a doctor requires years of training which leads to a low supply of doctors for a field that has always had high demand. Likewise, Doctors seem to be overworked so I'm not sure I can say they are being overpaid.
I don't think all the money that is being spent on healthcare is actually being funneled into doctors pockets.
You did say there are a top 15 reasons, but I think doctor salaries are a bad example.
No, the low supply of doctors is caused by the AMA, which keeps the number of accredited medical schools low. In the 90s, they were instrumental in getting Congress to pass laws that cap the number of residencies permitted per year. Medicare pays much of residents' salaries, and the law stipulates a maximum number it will pay for, a number that was fixed in 1997, and only changed once, in 1999 (and then only for teaching hospitals in rural areas).
The US population has grown by around 25% since then, but we're still getting the same number of new practicing doctors per year that we got over 20 years ago. Doctors are overworked because we have a shortage, not for any reason inherent to their profession.
> One thing that will not make healthcare less expensive is "Medicare For All". It will just shift the bill to different people.
This is what happens with corporate healthcare plans already, those costs get past onto the consumer (middle to upper middle class) and they pay a hidden healthcare tax on every purchase.
Any evidence of this? Some quick googling and I couldn't find anything about about employees with healthcare plans being paid less than employees without them.
If I understand the history of it properly, healthcare was always meant to be an extra incentive from a period where they weren't allowed to pay more. It's never been a tax on employees.
No reason? Hey, let's assume you're running a business. Only it's a special business. The customers really need your service. And they don't pay for your service. Someone else pays the bill for them. And they are extremely interested in acquiring the absolute top quality possible when using the service. So when you charge $50, but the guy across town charges $500, the customer will fight tooth and nail to get in and use your competitor instead. Call it 'reverse capitalism.'
That's insurance-supported medical care in the US. No one wants to go to the cut-rate bargain-basement doctor. And the majority of patients aren't paying their own medical bills. The insurance company is footing that bill. So when their kid gets sick, they're price-shopping in reverse. They only want the premium level, and offering a good deal actively stops people from using the service.
And that doesn't even get into the price-fixing that insurance companies engage in, entirely legally, because insurance is determined to be "not commerce" and therefore exempt from all antitrust laws. There is definitely a reason why Americas sub-standard care is so expensive - insurance.
"Medical schools/the AMA are artificially limiting the number of students and residents for their own ends (keeping wages and scarcity high) so they need to charge a lot."
That is the peril of this type of analysis. Clinician cost is only 20% of total healthcare spend. Your premise is flawed so your conclusion is invalid.
Looking only at clinican costs is akin to saying that a sandwich should only cost $1.50 because that's the cost of the ingredients.
Doctor wages tie into personal health insurance, medical malpractice insurance costs, hospital system insurance costs, and more.
Even if you were correct on the cost bit (you aren't), you're completely ignoring that artificially constraining the SUPPLY of doctors causes massive cumulative ripple effects adding up to significant costs across the system.
The AMA is absolutely a cartel restricting supply and artificially keeping wages high. Have you taken a look at any other health care system in the world?
You just proved my point, you know that right? It's the healthcare delivery and the markups along the way. If you paid doctors $0 tomorrow, healthcare costs would go down by 20%, at best, and probably less. Your analogy is perfect, actually. The problem in sandwich cost is rent, utilities, administrative expenses, marketing, an acceptable return on investment to the owners, etc, etc. The actual good being sold, a sandwich, probably costs 10% of what you pay retail.
Your repeated use of the phrase "cartel" is not impressive or convincing to me. In every other field: civil engineers, lawyers, real estate agents, accountants, teachers, police, and countless others have licensure, education, and training requirements.
And thanks for you concern, but I am familiar with many other global heath systems.
I notice you ignore LNPs and PAs in your analysis.
On the contrary, you proved mine. I worked in medical devices and hospitals for a significant portion of my career, and I really don't care that you aren't impressed by the term "cartel", that's your prerogative to turn a blind eye to the facts. It's a combination of inflated salaries plus numerical shortage of doctors (the two are related) causing the root issues here. You claim to be familiar with other health systems; care to explain why in every other developed nation where doctors are not so overpaid, health care costs are reasonable?
NPs and PAs are not allowed to perform a significant number of medical procedures; I see you ignore that, conveniently, and bringing it up isn't much other than a red herring.
The "cartel" term has been used both colloquially and in academic literature for quite some time:
I'm very glad you pointed that out; I mean, jparks makes the same claim you make - that salaries aren't the problem - and doesn't address the artificial restriction of doctors at all. In other words, he fails to refute the "AMA isn't a cartel" claim. If you prevent the AMA from artificially restricting doctor supply, the overall cost of health care drops significantly, and the health of the population increases considerably.
As a consequence of the overwhelmingly positive benefit of lifting the artificial supply of MD (or DO), doctor salaries will naturally drop, as necessitated by economics.
I think you're focusing a bit too hard on this. If we broke the AMA cartel, prices would not magically fall to be in line with other developed nations. The AMA cartel is certainly a factor, and not small one, but it's not the only factor.
We also need to fix the high administrator-to-doctor ratio that adds costs.
Insurance companies provide little value and just extract money from people. They need to go away.
Many low-income people skip out on preventative visits because they can't afford them. This leads to high-cost illnesses later down the road that could have been prevented or mitigated with proper care.
So yes, doctor salaries are inflated, there is a shortage of doctors, and the AMA is a cartel that limits supply. But there's more to it than that.
With more doctors (and consequently lower salaries) the cost of preventative care drops, no? And perhaps just as importantly, the EASE and time-delay of getting an appointment drops.
Blue collar workers tend to wait, as you said, until an illness becomes critical - because they have to work 9-5, the same hours doctors work. With an additional 25 or 50% of MD workforce, we can easily begin offering preventative care services outside of 8-5, allowing low-income people to get the preventative care they deserve without affecting their livelihood.
We should strive for primary care visits to be available 7am-7pm (at least), 7 days a week, in every hospital/clinic in the nation. And specialist visits should be bookable in ~2-3 weeks max, not the 6+ week timeline many individuals requiring a specialist face.
I agree with all your points, and definitely the administration costs I hope will drop as we get better ML/AI technology. I don't personally see a realistic way to get rid of the insurance companies, but they can be quite harmful. Finally I also would like to double down that the "cartel" aspect is the single largest contributing factor.
> Medical schools/the AMA are artificially limiting the number of students and residents for their own ends (keeping wages and scarcity high) so they need to charge a lot...
That sounds like a strange conspiracy, do you have evidence to support that?
Keep in mind 20+ years ago that insurance was much cheaper, deductibles were almost nonexistent, and care networks were giant. Talk to your US parents or grandparents about their costs of health care, you'll still be stunned at how much cheaper it was. Medical schools and the AMA still existed then too BTW.
http://www.jparksmd.com/blog/a-massively-overpaid-cartel (this doctor attempts to refute that the AMA isn't a cartel by making the point that doctors are "overpaid" in the US as compared to Europe by the same factor as for many other professions. He however intentionally avoids the point of the restricted supply, which is the root cause of the issue, the artificially high salaries are simply a symptom of the disease)
Yep, and what people don't always realize is that because employer health plans get more expensive every year for employers, it negatively impacts wage growth. You are paying for it even if you don't necessarily feel it.
This is really important. Pulled from the underlying study[1], employers cover 82%/70% (individual/family) of the cost of healthcare. Those numbers are down just slightly from 86%/73% in 2019.
Or, put another way, employers have borne 69%/80% of the cost of healthcare increases. You complain because your individual plan has gone up by $986 in 20 years? Your employer's cost has gone up $4,005. Oh, and that's with cutting the underlying coverage ("skimpier").
It negatively impacts wage growth because that extra $4k is a bottom-line benefit (or cost of employment, if you want to think about it that way).
Finally, note the disparity between individual and family plans. Employers are offering 2.5x more benefit—nearly $9,000 more—to workers with families.
Fig. 1.10 shows premiums increasing from $2,196/$5,791 in 2019 to $7,188/$20,576. (Note also that 72% of that is attributed to premium increases vs. inflation and worker earnings, per Fig. 1.14.) Fig 6.1 shows % of premium paid by workers going from 14%/27% to 18%/30%.
The benefit for employers is there are a lot of workers who are there now solely for their family health insurance coverage. I have a feeling this has prevented earlier action by employers, but now it’s past the tipping point.
> Finally, note the disparity between individual and family plans. Employers are offering 2.5x more benefit—nearly $9,000 more—to workers with families.
Interestingly, my employer discloses the full premium that they pay to the health insurer every year. As an employee without a partner/dependents (I just graduated college/started my career), my employer spends ~$17k/year less on my health/dental/vision benefits than employees with a partner/dependents.
That effective pay difference makes me mildly salty.
It's an interesting topic, particularly as it relates to employers being women/family-friendly. How do you feel about parental leave, for instance?
Of course, this is a benefit that's within your control: just get a partner/dependent! And the flip side is that even individual employees might value knowing that the company "has your back" as your family situation changes.
Or, more bluntly, your company has to offer disparate benefits, because other employers do, and no employee with a family would work for your company otherwise.
Of course, all this masks the REAL problem that employers and healthcare are so intertwined. Even this article puts some of the blame on employers, when really it's the healthcare companies and the overall rising cost of care.
But the individual policies on the exchange have increased year over year as well, and a lot of those insurers on the exchange went out of business/disappeared after 2-3 years anyway.
(from 2017-2018 for example insurance on the exchange increased 32% for silver plans and 20% for Gold plans)
I don't understand what that has to do my comment. I never mentioned anything about the exchanges. Health insurance policies generally get more expensive year over year for everyone, whether an employer is paying for it or you as an individual.
You seem to be highlighting employer provided insurance costs increase (which they do), but historically they increase at a lower rate than individual plans (i.e. the alternative).
The articles is about employer health plans getting more expensive, the comment was about employer health plans getting more expensive...whats the alternative to an employer provided health plan? An individual private plan, I thought it seemed relevant those are increasing in cost too (at a much higher rate).
> whats the alternative to an employer provided health plan?
There are a number of alternatives:
1. Government health plan at the state level (i.e. the Canada model)
2. Compulsory private insurance (i.e. the Switzerland model). But employers don't provide it and insurers have to insure everyone who pays. Single, larger, and more diverse risk pool instead of 3 separate pools - one with working age people and children, one with old people, one with everyone else
3. Government-owned and -operated hospitals and clinics, free at the point of use (i.e. the UK model)
4. Government health plan at the federal level (i.e. the France model)
All four have been found to cost less per patient for similar or better outcomes.
Doesn’t the fact that vastly different systems perform better than the US possibly suggest that our problem is something other than the payor model? What is the theoretical reason why US costs would be higher than Switzerland? Premiums for private insurance should be much lower in the US, given that Medicare takes high cost people out of the private pool.
The US hasn't had compulsory private insurance up until about 10 years ago. Before that costs were going up even faster[1]. Even then if your employer is providing your health plan the amount of "shopping around" you can do is limited - most companies have 2 or 3 options (a PPO, an HMO and something with an HSA). This leaves only the uninsured (i.e. the poor) or previously uninsurable (pre-existing conditions) in the actual open private insurance marketplace. It's not surprising that premiums there will be crazy high and it's not really that close to being the Swiss model.
> our problem is something other than the payor model
I partially agree with that - the payer model is one facet among many. There are other problems with healthcare in the US. Hospitals can veto opening of competing hospitals in the area, complex billing, not enough residency spots leading to a shortage of doctors, whatever the F is happening with prescription drugs etc. GP was only asking for alternatives to employer healthcare though.
The difference between Switzerland and the US is that in Switzerland pricing is regulated. The free market does not work when your life is at stake. You can shop around as much as you like for a butt enlargement and skip it if it's too expensive, but if you find a bat in the bedroom you need a physician straightaway, and then he will overcharge you.
There are some procedures where shopping around is conceivably an option.
Once you're in desperate need (say, when it's bad enough that you're calling an ambulance), or unconscious, it's not realistic to suggest price-shopping.
Markets of the mostly-free sort work well enough for commodity products, like the kind of peanut butter you're buying a jar of every few weeks (though even that's regulated, from things to food safety to nutrition labeling); for everything else, government's a fabulous tool to make sure people aren't taken advantage of, whether it's through heavy regulation (e.g. Switzerland, as someone mentioned) or offering the service itself (e.g. UK).
The vast majority of health care is a commodity product. Unless you have some super rare condition, whatever your problem happens to be it's extremely likely to receive more or less the same treatment from a large number of potential providers.
Yes, it would be great if US employees had those options, but they don't hence they aren't alternatives. The main alternative in the US to an employer based group insurance policy is an individual plan.
One day the US may catch up to the rest of the world, but unfortunately, the US seems content with millions of uninsured, healthcare related bankruptcies, and milking those who can afford coverage more every year in exchange for less.
> Not to mention the millions of people locked into careers they would otherwise get out of, if not for the health coverage.
Replying with a throwaway for obvious reasons. I work at one of the big tech companies -- I'm paid well, but the benefits are very good. I just got an offer from a startup that I really like. It's a job I would like to take.
I'm going to have to turn down the offer. Part of the reason I'm going to have to turn it down is that even though it offers insurance, its coverage isn't as good as what I have and the subsidy offered will add $15k a year minimum to my health care expenses. My partner needs surgery (an expensive surgery), and I'm the primary bread-winner (for now) -- I have to make pragmatic decisions because of stuff like healthcare, even at the expense of my own aspirations.
And to be clear, my scenario is significantly better than so many others who are stuck in truly terrible places (where I work is not terrible by a longshot) or in careers they would like to change, because the truth is, health care in the US is a joke.
Insurance on healthcare.gov is really not bad - just get $20k more from startup and buy your own insurance. Assuming idiot republicans don’t fuck it up in the next few months.
Even if the current employer is big enough to negotiate lower prices or deals for its coverage and that's a barrier to entry for the startup, both companies could be set one a level field in a universal healthcare system removing this cost center from both companies. Even if the cost is (partially) rolled into something like payroll or income taxes, it would still impact the big company and the startup much more equitably.
Barriers to entry are one item this site and many of its users and are fighting to better disrupt industries and create value. If you can't get talent because you can't provide healthcare and a solution for that exists in most developed nations (universal care), why are we not engaging that?
Large employers are self insured. The insurance companies just manage the benefits. In that sense there is no negotiation, beyond a manager fee. Price is determined by health of employees and benefit level.
I'm assuming the unspoken point here is that, after negotiation, the startup couldn't make up for enough of the difference for the parent to be able to seriously consider them.
Have you looked at a newspaper since, say, 2007 or so? You will find that many have politics sections which have spent an awful lot of time covering the matter. Other news sources frequently cover it as well.
I just want to tack on: People being forced to skip simple preventative medicine, potentially building up a ticking time bomb when those conditions become more expensive to treat.
> An entire generation is draining their savings to keep up with premium costs.
Knock on wood but, myself and pretty much everybody I know has insurance covered ~75% through our full time employers. I think my portion of my insurance is about... $100/mo? I've never had to use it way/shape/form in the past... 5-10 years.
Isn't the truth that the most unhealthy people are what drives health care costs?
It'd be interesting to see a visual of who uses their insurance and how much of it they use. Let's not forget that lack of exercise, obesity, and heart disease are rampant in America.
No. I have a set of skills that the market finds valuable. Part of that value is providing health insurance. Any employer I choose will pay me a salary, and have healthcare benefits.
Somebody has to pay for it... and it currently isn't the billionaires like Democratic candidates wish it was.
Do you not see how much this limits your mobility and freedom to do as you please?
If health care (and insurance) were de-coupled from your employment, you would have much more freedom to move around jobs, or even go without a job for a time if you so chose, etc.
Would you be OK with your employer paying for your housing? education? food?
Your employer being in control of your health (and those other things) is sickening. They are just taking power and choices away from you.
> Knock on wood but, myself and pretty much everybody I know has insurance covered ~75% through our full time employers.
That is money that would otherwise be given to you in the form of salary, so, yeah, you're paying for it even if it doesn't seem like it.
Historically, the main reason for employer-provided health insurance in the U.S. is that it provided a loophole to increase effective employee compensation in a tax-free manner.
My employer dropped dental insurance a few years ago. They never gave me a pay bump to compensate. Now I spend $1,600/year on cleanings for a family of 4. At least it is out of my HSA, so pre-tax.
They likely dropped it due to budget issues, so of course they weren't going to give you a pay bump. If they had dropped it simply because there was no need to give it to you, you'd probably see a pay bump, or at least faster salary growth in future years.
This isn't universal and it's also not inclusive of those people who have spouses/partners or children/other dependents. Your employer may cover your premium (or most of it), but it won't always cover those of your dependents at the same percentage.
And I say this as a person who is, with few exceptions, healthy. But medications for common conditions and emergencies , can radically change the cost of all of this.
It seems to be more the exception, rather than the rule, that you will continue to be fine without medical coverage for eternity. One day, something is going to happen. Consumption of health care tends to be back-loaded in life.
Yeah, I really wonder where that $10,000/person figure comes from when you remove obesity and smoking related illnesses, so, the two highest and most preventable causes of death in this country.
I always believed you should be able to qualify for lower costs (or be charged higher) depending on how you take care of yourself. Annual physical fitness test. I'm a little sick and tired of paying high premiums for people to have healthcare that don't take care of themselves.
> I always believed you should be able to qualify for lower costs (or be charged higher) depending on how you take care of yourself. Annual physical fitness test. I'm a little sick and tired of paying high premiums for people to have healthcare that don't take care of themselves.
Better hope you never get in a car accident or similar accident or get diagnosed with cancer or a chronic condition.
Congratulations for being in perfect health and not needing any sort of medical care. There are plenty of people who don't smoke and aren't obese and can still be bankrupt by standard medical treatments.
I would bet money (let's say the value of my annual insurance premiums) that if the two of us took a physical fitness test or compared overall "health" in areas that are more controllable (weigh, cholesterol, body fat percentage, amount of exercise, and other indicators like smoking/drug/alcohol use), I would be considered healthier than you.
But I have an endocrine condition that requires very expensive medication and annual tests that cost a lot of money.
You're selfish, and that's fine. But the second you ever actually need health care, I hope you remember how quickly you dismiss "people who don't take care of themselves."
The brotherhood of "we can all band together to pay for each other" falls apart when the line to McDonald's is wrapped around the corner in my eyes.
If you take in over 3,500 calories a day of pizza, soda, cheeseburgers, or candy then follow it up with little to no exercise/movement, you are contributing to the "health insurance crisis".
It’s also an absolute moral disgrace that we’ve decide the profits of insurance industry and other for profit entities are more important than many people’s lives and the suffering of many others. Anyone who wants to argue in favor of the continued existence of this system should have all of this hung around their necks.
I hear this statement all the time...but what does it mean?
If employers didn't provide health insurance to employees wouldn't we just wind up with 40% of the insured uninsured? Its not like Corporate America is going to make up the difference and start paying cash to compensate for the lost benefit, at least thats what happened as pensions got stripped away from the workplace. Even if the employer's did make up the cash difference, its not like that will bring pricing down, individuals can't negotiate individual insurance rates, pools of employees can negotiate group rates, so if anything costs would probably go up.
How will this help: 1) insured more people; or 2) bring costs down?
We would do what every other country does and offer healthcare as a basic right? The whole point of "Medicare for All" is to divorce employers from their employee's healthcare. The gov't negotiates on behalf of everyone.
The government negotiating rates on behalf of all citizens is not the same as the government paying 100% of all citizens' costs. "Medicare for All" is the latter; but all we really need is the former. Basically the government could do on behalf of all citizens what it already does on behalf of government employees and elected officials: negotiate with providers to come up with a menu of plans, and then let each person/family select the plan from the menu that works best for them. Who pays what part of the premiums and costs is a separate question.
"Medicare for all" does not mean free healthcare. It's paid for by taxes. You taxes become your "premium" under that system. The concept of "private health insurance" outside of supplemental insurance would not exist under that system.
> "Medicare for all" does not mean free healthcare. It's paid for by taxes.
I didn't say "free healthcare". I said "government pays 100% of costs". Yes, that means ultimately we all pay them through taxes.
> The concept of "private health insurance" outside of supplemental insurance would not exist under that system.
Under Medicare, "government pays 100% of costs" also means "government is the only provider of health insurance". But my whole point is that you don't need to do that in order for the government to use its negotiating leverage to negotiate better rates; the government can do that even if the rates it's negotiating are with private insurance providers. That's basically what the government does now for Federal employees and elected officials; they aren't on Medicare, they have a selection of private insurance plans that have negotiated rates with the government. My suggestion is to simply extend this to all citizens, so the government can negotiate even better rates since they now have a much larger pool of people to negotiate for.
MFA is a single-payer option but there are plenty of multi-payer healthcare systems in the world which achieve universal coverage and contain costs. Germany would be the prime example, but see also Switzerland and France.
I like single payer, but I haven't had the luxury of living under either system of universal care.
I think in the US we have different issues than face Germany/Switzerland/France, and for the US to contain costs my opinion is we would have to rip private insurance out completely.
Our main Government provided system (Medicare for the elderly) is a combination of government and private, and to put that system in perspective, Germany spent 375B (not sure if $ or Euro) in healthcare total in 2017, and US Medicare spent $609B in 2017. Germany covered an entire country (82M people) Medicare covered 15% of the US (44M people).
I am a U.S. citizen. Yes, cost is a huge issue. We would not have to rip out private insurance, but we would probably have to regulate pricing, which is how it works in Germany. Folks should be welcome to buy supplemental insurance as they do with Medicare. There's basically four models[1] for providing health care, and the US has all of them:
The Bismarck model like Germany with multiple payers, but they are non-profit and pricing is regulated. Doctors and hospitals are private, and there is still supplemental private insurance. Financing is a combination of employer and taxes, where the government takes over the employer portion if the person is unemployed. This is sorta what the U.S. has for those with employer subsidized health care except for the insurers being for-profit and unregulated pricing.
The Beveridge model like in the U.K. financed through taxes and where the government provides care. This is so-called socialized medicine. In the U.S. we have this system for veterans in the form of the V.A.
The national health insurance model, with private doctors and hospitals but the government is a single-payer. Canada. Medicare.
And lastly, out-of-pocket.
We use all of these in the U.S. and it's insane.
We could in theory adopt a Bismarck system. Force the insurers to be non-profit. Make everyone work off Medicare pricing. Supposedly existing Medicare pricing is too low. Fine, let the doctors and hospitals negotiate that with Medicare. Allow supplemental insurance for those who want it.
MFA polls badly when you ask Americans what if they had to give up their current insurance. But I think this is misleading. Of course it's going to poll poorly if you ask someone to give something up. That's basic loss aversion. Turn the question on its head and ask a bunch of 65+ year olds how they'd feel about giving up Medicare in return for their Medicare withholdings back to buy their own private insurance. Guessing that wouldn't poll too well.
I don't think MFA is necessarily the best option. Americans value choice. But it seems to be the universal care option with the most political momentum right now. I'll take it. But I'd be happy with a Bismarck-type system too.
As long as people are covered it would be a good start (I won't bother engaging further on the single payer/private insurance/hybrid systems, not enough room and not the right forum)...it just scares me to hear the game plan to get there is political pressure after a critical mass of people are uninsured. I know that is not attributable to you, and you seem optimistic we get there anyway, I hope you are right.
One last thing I will note, is there are all kinds of hidden costs through other insurance that hopefully would come down under a single payer (maybe even under a public/private hybrid like Medicare Part D) , take car insurance one reason premiums and deductibles are so high is because a lot of that goes towards personal injury claims (medical costs). The same can be said for odd things like homeowners insurance for example. A lot of these insurance policies people already pay for in some ways supplement health care coverage.
Well in response to my questions about why people want to divorce insurance from employment before universal care becomes a law/right/option, one commented answered:
>>Having a critical mass of uninsured people is the foundation we need to resolve the healthcare crisis in America.
$375B for 82M people (~$4,500 per person) for Germany. Versus $609B for 44M people (~$13,800 per person) for Medicare.
FYI, USA currently spends about $10,800 per person on healthcare, roughly $3.5 trillion.
IMO, the discussion should revolve purely around pricing and efficiency. Negotiating power alone isn’t going to drive $1.5 trillion in costs out of the system.
I would like to see basic pricing reforms demonstrate that year-over-year price can be held constant. That would be a nice start.
> Negotiating power alone isn’t going to drive $1.5 trillion in costs out of the system
Of course it could. It works in Germany! And France! And Switzerland! Why not here?
Look, I don't know how this can possibly work with our current system. It cannot be solved by the market alone. There's no transparency in the current system. Insurers can just keep passing price increases along. And many Americans want "the best" and "right now" and that ends up increasing costs for all of us.
People will argue that the American system is so expensive because: reasons. e.g. we subsidize the rest of the world. Or we are overweight. Or we don't get enough exercise. Or we want the best of everything. Or health insurance profits and CEO salaries. Or fraud.
We also keep saying: America is exceptional. None of what other countries do will work here.
So what do you propose? At the end of the day, doctors, hospitals, and the payer or payers need to negotiate reasonable pricing for decent care. And that cost needs to be spread equally across all Americans. I'd favor doing it with cost-sharing from paychecks like we do now for Medicare, with the government picking up the bill for the unemployed, and with tax credits to offset income differences. I like the system than France has, where you have a co-pay, but it gets reimbursed. This makes the consumer at least aware that there is cost to using the system. Then allow supplemental insurance for people who want better.
And Americans will somehow need to realize that not every medical problem has to be solved right away. And that you don't need the most expensive treatment option for every issue.
We cannot continue to ration health care by ability to pay. It's immoral.
1) We cannot provide the same services with the same mechanisms, processes, and infrastructure at 50% of the current price. The margin simply isn’t that high. Everything from the design of the hospital, to the regulations around the equipment provisioned in each room, to the processes followed by staff throughout a given patient visit need to change, along with the specific tools and techniques used to perform procedures, before we even get into how and what procedures are chosen to treat or manage a given symptom or disease, whether acute or chronic.
2) Even with all of the above, a system that optimizes for price will absolutely have to make trade-offs in other areas to achieve that. Understanding where, when, and how those trade-offs are made and if they are being made fairly and uniformly based on malady, procedure, patient population, etc. is not a minor detail.
These are massive structural, policy, and economic changes which will impact a double-digit percentage of GDP. Why should anyone have any faith that this will be done in any semblance of a sane, reasonable, compassionate, let alone fair, efficient, or effective manner?
If the government has shown it’s entirely incapable of passing effective legislation to manage the cost of healthcare, why should government be granted an order of magnitude greater role in the provisioning of care?
And yet it manages Medicare. Poll Medicare recipients and ask them what they think of it. It also manages Social Security. And provides for the national defense. The government is entirely capable passing effective legislation, or at least half of it is.
In any case, the current system is both unfair and unsustainable. Something has to give.
Just to be clear, Medicare costs are roughly 50% higher again per person than the current average US cost per person. Patient population being a major confounder in that comparison, of course.
US defense spending is by far the highest of any other country in the world, and renowned for its wastefulness.
Social Security is going bust whenever we talk about it, and is merely a program which confiscated money today, in order to hand it out tomorrow, and doesn’t even invest it in the meantime.
And which half of government is it that’s capable of passing legislation again?
>Medicare costs are roughly 50% higher again per person than the current average US cost per person.
The numbers speak for themselves and it is ridiculous the US spends 100% more for half the people (e.g. Medicare) than Germany spends to cover 2x as many people and their entire country.
That said keep in mind Medicare patients are the most expensive patients in that they have the highest rate of chronic diseases of any other demographic. Its not apples to apples, but more importantly a Universal coverage could probably be extremely effective in preventing untold millions of chronic conditions through preventative care. What happens now is millions of people reach Medicare eligibility who had no coverage before and as a result have all these untreated chronic conditions, and then boom Medicare has to cover the tab when they become eligible. Its such a stupid system, there are even cases of heart surgery's and cancer treatments that are delayed until a patient hits medicare age, making the issue worse and more expensive to treat.
It may sound like I am taking a devils advocate position, but I 100% agree with you on governmental waste.
Getting insurance as an individual is expensive because you’re not part of a group plan. With a group plan the insurance company has some reason to believe you’re not collectively a bunch of dying people committing moral hazard, you’re just one of a generally similar looking company workforce.
If employers stopped providing it, I think it is presumed that the mentality towards individual plans would change
Sort of. This is true if everyone is required to participate in the system. And there’s only one provider. If you imagine there being a cheap plan and an expensive plan, you would probably expect that the expensive plan is a way better return on the dollar because there are fewer poor people on it weighing it down (because poor people are likely to have more health issues).
True meaning it averages out to a reasonably healthy person
>you would probably expect that the expensive plan is a way better return on the dollar because there are fewer poor people on it weighing it down
It is unfortunately true in the US (probably everywhere) there is worse health/higher incidences of chronic conditions in the poor (mostly because all chronic conditions are diet related). However, in the US the biggest weight would be the elderly who have chronic conditions at a higher rate than any other demographic (generally due to a lifetime of poor diet combined with irregular care over their life to treat the conditions until they are Medicare), but thats the irony these are the people already covered by Government healthcare (and they seem fairly happy with it. Its time to extend it to everyone.
It’s kind of created by the immoral environment of private insurance, but I would argue someone who doesn’t have health insurance to save a few backs, who can otherwise afford it, and waits until they suddenly have $100k expenses incoming to get insurance is a moral hazard even if they’re going to die.
Imagine there were no private companies but a perfect decentralized blockchain shamwow insurance system that magically worked and distributed all profits back to its participants.
I would think the dying man is committing moral hazard here. But it’s up for debate.
If you do this against a big private insurance company and they lose a penny, it doesn’t sound so bad, but I’m not convinced
> Getting insurance as an individual is expensive because you’re not part of a group plan.
I see people say this constantly. Insurance by definition is literally always a "group plan"—everyone who buys insurance is in the same group. That's literally the point of insurance. It's why it exists. That's what it is. That is fundamentally how insurance works. All insurance, in every category, of every type. There are no exceptions.
Insurance always pools risk across all payers (everyone is in the "group"), and then you expect only a fraction (but we don't know which fraction, of course) to require a payout in any given payment period.
If you're selling something that doesn't work like that, then it's not insurance—by definition.
You see it constantly because it is true. A group plan is a thing. Yes you’re still in a “group” when you register as an individual, but it is an “individual plan” and semantics doesn’t really help you out.
The difference is that if I know the mean and variance of expected health costs for the group, I can offer a lower premium to every individual member because the variance of total actual cost goes down by n^(-1/2) and I don’t need to cover my butt as much. Especially since almost all group plans are centered around relatively healthy working age people. The privilege of group plans is you’re in a healthier subset.
Individual plans are for people not on those plans and they suck dickballs. There is a high chance of moral hazard. There’s more retired old people. You offer little value to the insurance company so you don’t get to negotiate like a group plan does.
Medicare is mandatory in the US for retired old people. It's universal, it's mandatory, and it covers everything. They're literally not in the insurance pools, so I don't know what you're talking about.
As for the "group plans", those "groups" are too small for insurance purposes—they do not spread risk effectively. The entire "group plan" thing is a scam, and it would be trivial for gov't to just outlaw them entirely in the US, and force individual pricing on business-purchased health insurance like we do for every other kind of insurance we have. Costs would go down for everyone, and individual plans would no longer "suck dickballs".
That said, that is not how I would "fix" the health insurance issues we have. But it's at least better than what we do now...
> Medicare is mandatory in the US for retired old people. It's universal, it's mandatory, and it covers everything. They're literally not in the insurance pools, so I don't know what you're talking about
How about everyone who retired before 65?
As for your other points, I mean yeah, we shouldn’t have employers provide it. But they do, and you need to recognize it. There are definitely group plans large enough to spread risk.
That's all fine in theory, but do some shopping-around and you'll see it's simply untrue.
Personal anecdata:
2018, my employer didn't offer insurance. I signed up for a "silver" tier individual plan ($1250 deductible, good coverage) on the ACA marketplace and paid $170-something/mo. (after receiving ~$250/mo. in tax credit).
2019, my employer starts offering insurance, so I'm no longer eligible for the ACA tax credit. The only plan they offer costs me $125/mo., has a $4500 deductible, and extremely skimpy coverage. According to the literature they gave us, my employer's pitching-in another $400-something/mo.
So this group plan costs significantly more, has a much higher deductible, and covers significantly less (in my case, it's the difference between medication being covered and not).
Huh I didn’t know about the tax credit. That sounds like another layer of backwards thinking and another reason to get rid of the whole practice. I’m sorry for your situation.
The "Premium Tax Credit"[0] was a centerpiece of the Affordable Care Act (aka Obamacare), and widely publicized by the media and Obama. ACA exchange premiums are not affordable for most of the people it was trying to help without the tax credit.
I don't think I understand this. Take two scenarios. In both cases, I'm 22 years old, just exiting college, and starting my first job.
In scenario 1, I start working at a 1000 person company that offers insurance benefits. I sign up for their plan, and my employer pays for nearly all of it.
In scenario 2, I start working at a tiny company that doesn't offer insurance benefits. I find an individual plan (coincidentally from the same insurance company used in scenario 1) that suits me, and sign up for it, paying out of pocket.
The total amount paid to the insurance company in scenario 1 is, as is typical, lower than in scenario 2.
In both of these scenarios, the insurance company doesn't know anything about me. For scenario 1, sure, they might know the mean and variance of expected health costs of the 1000 people already at the company, but that does not extend to me. They cannot assume I will conform to the rest of the group. I am new, and an unknown, and they do not know how I will affect those statistics. For scenario 2, I'm just another independent signup. I might have health care costs in line with the average of all of their beneficiaries, or I might be an outlier (on either end), or something in between. But that's the same as scenario 1.
This feels like it has nothing to do with risk assessment; this is just a reflection of the company in scenario 1 having greater negotiation power because they're representing 1000 people, versus you just representing yourself.
Having a critical mass of uninsured people is the foundation we need to resolve the healthcare crisis in America. Those uninsured people still need healthcare. If enough people start calling up small clinics asking for pricing, a cottage industry of small health providers will pop up to service these people with transparent pricing.
The insurance industry has perverted our healthcare system. The major reason doctors moved from private practice to being associated with hospitals is to simplify billing because health insurance companies look for any reason to refuse payment. To reverse this trend, we need more people willing to bypass insurance and buy healthcare directly.
Health insurance is a failed experiment. People should pay for their healthcare directly, and the government should provide for those who require serious, expensive treatments (after a payment that is some percentage of their income).
>Having a critical mass of uninsured people is the foundation we need to resolve the healthcare crisis in America.
Thats actually exactly what I think the thought is for most people who advocate this...remove employer provided insurance and there will be so many uninsured that someone will have to do something. I think the hope is that something would be "Universal single payer healthcare coverage."
That may be right, but we already had 50 million uninsured american's and Obamacare barely passed and was pretty insurance friendly. I just don't see the political will to get it done, then we are just stuck with 40% of the currently insured uninsured.
Specialists that operate outside of most insurance networks, such as plastic surgeons do pretty well. As do specialties like dentists, orthodontics, and optometrists where insurance coverage is limited and a significant number of people pay out-of-pocket.
And I'd argue that the US is moving towards a similar system for healthcare. Lots of small clinics are popping up around the nation to provide limited care to individuals for price-conscious individuals.
What we need is something to cut the tether that insurance companies have. Insurance is nearly as important for determine the rates you pay for care as it is for covering costs.
> People should pay for their healthcare directly, and the government should provide for those who require serious, expensive treatments (after a payment that is some percentage of their income).
It's cheaper for the government to pay for everything. If you incentivize skipping check-ups and minor treatments they turn into large expensive care.
The rest of the western world has had universal health care for ~50 years now and it works better in every other western country than it does in the US. The US should just choose a country and copy it.
> and the government should provide for those who require serious, expensive treatments (after a payment that is some percentage of their income).
I'm for it as long as it doesn't involve the government micromanaging how the health care providers perform their services. This is a problem with all health insurance, public or private, but the micromanagement is done on a more direct level with government-provided insurance, with doctor report cards and so on. They do this now for at least some Medicaid and Medicare implementations, and some of the provisions of Obamacare even accelerated this process.
I think the implication of the GP's comment is that we still provide it, we just don't tie it to employment. There are a lot of nasty side effects of this coupling, including decreased employee mobility.
It's not mutually exclusive with a Universal Healthcare plan, for one thing. But I think it's still a worthwhile goal with or without a separate initiative for universal healthcare.
It brings costs down, because many more people are now on a level playing field. If we stick with the current market-based system, this would make a big difference in actually having it start to function like a market. The average, middle class American will actually have to evaluate the costs of their plan and shop around for the best value, and they will also be very aware of how much they're spending and push for measures to bring down costs. If we do also build up a universal healthcare system, then working, middle class people will end up actually using the universal healthcare system, and again will be incentivized to push to make it work well.
As things stand today, people on the "open market" plans are clearly being treated as second class citizens, they're paying more and getting worse coverage than people who have a special connection (whether that's a company plan, union, etc). The taxing is also wonky and unfair, at least if I understand this correctly if I pay for a marketplace plan I'm paying with after-tax money, but if my company pays for my plan it's untaxed.
In my opinion there are also additional reasons this would be a net good thing, even if it were merely neutral on the two criteria that you call out. It will give people more freedom to do what they want to do -- right now if you want to quit a job or work only part-time, even if you have a source of income or savings to make it feasible, healthcare is a major hurdle. If you want to start a small business and need to offer healthcare for your employees, it's an even bigger hurdle. I would rather live in a world where it's as easy as possible to make your own path, and people are not beholden to a full-time job to have access to healthcare.
> individuals can't negotiate individual insurance rates, pools of employees can negotiate group rates, so if anything costs would probably go up
This is why the exchanges exist. They're huge pools of people on a group rate. New York state negotiates with insurers on my behalf, and is additionally able to regulate their premium increases each year.
And the nice, healthy white collar lived are locked away in employer group health plans, resulting in fewer insurance companies being able to offer insurance on healthcare.gov, resulting in higher premiums for lives on healthcare.gov.
Another advantage for big businesses over small businesses.
Who is in charge of negotiating for this pool? Just as an example between 2017-2018 the average silver plan went up 32% and the average gold plan 20%, who the hell negotiated that?
At least with the employer provided insurance the employer is negotiating, and you know who that is and you know they have a self-interest in keeping costs down.
The price of insurance jumped massively every year from the start of Obamacare to 2018. The fact that this has apparently mostly stopped now is the unusual thing; 2017-18 was a pretty typical year despite Trump's meddling. The article you linked suggests that this is because insurers have finally increases the cost of insurance to be in line with how much it actually costs them.
Sure the employer negotiates the plan, but they are not negotiating on behalf of their employees, they are negotiating based on how much the employer is willing to spend. When the squeeze happens, the employer pays the same amount for a slimmer plan and the employees pay more in the form of wages and deductibles.
1 - If my company buys health insurance for me, its tax deductible(pre-tax), if I buy it myself it is after-tax. Now companies are can just gross-up pay, and don't have to compete on healthcare...
2) Pooling remains an issue, but as it stands now, consumers have little to no choice, one would imagine that once a 125m households start shopping for insurance there is going to be competition on price...
I believe the pre-tax post-tax thing is actually wrong. The difference is that you pay for the plan with post-tax money until tax season rolls around, when if I remember correctly (from having an individual plan for several years) you get to deduct those costs.
So really, it's just the typical American thing of people being terrible at understanding tax codes and adjusting their withholdings correctly.
>You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you're allowed to deduct on Form 1040, Schedule A.
It’s another subsidy for big business in the US. If you work for a small employer that doesn’t offer health insurance, you’re paying with after tax money.
My reading of this [1] seems to match up with what I said:
"""
- If you buy health insurance through the state- or federally run health insurance marketplaces, you can deduct only the portion of the premium you pay out of your own pocket. You cannot deduct the amount of any subsidy.
- If you buy an individual or family health insurance plan, either on the open market or through a marketplace, and you pay all of the cost out of pocket, then the whole amount is deductible.
There's two proven paths to do this on different ends of the spectrum.
The first is single payer which has proven implementation and is able to lower costs by directly controlling prices.
The second is what Switzerland does which is where much of the inspiration for the ACA came from, except every single person would be required to buy from the exchanges rather than using some employer program. The ACA failed to properly acknowledge the negotiation power of certain large employers who often have large numbers of healthy young employees and have a deep understanding of their own risk pool, leaving the ~3% of people who use the exchanges paying more simply because they are a higher health risk population. Additionally, the ban/tax on "cadillac" plans absolutely needs to go into effect as it's an important mechanism for controlling costs in a market health insurance solution, as in demand doctors could just require patients have said cadillac plans that pay out more.
There are handfuls of solutions in the middle of this, but they generally involve the government controlling prices to a certain degree, but only single payer would be effective at both bringing costs down and insuring more people, as you absolutely have to create short term shortages in order to solve both problems at once.
I think the concept of separating healthcare coverage from employment is an important first baby step to bringing costs down in that it makes healthcare consumers more aware of how much they are spending instead of hiding it as off-paycheck compensation.
This awareness can be raised in other ways. For example, some employers have added a chart in HR websites that outline how much is spent on each employee (it is personalized for each employee) in categories of wages, taxes, retirement, healthcare and the like. It is a way of communicating how much money is expended on an employee.
If one were to know how much was spent on one's healthcare coverage, would the average person think "ok, need to be efficient to get that number down" or "gosh, I better get what I'm paying for?" In the sense that healthcare plans are transfers from the healthier to the sicker, one would hope the former. In the sense that healthcare plans are almost-all-you-can-eat buffets of medicine, I think the latter is more likely.
> Its not like Corporate America is going to make up the difference and start paying cash to compensate for the lost benefit, at least thats what happened as pensions got stripped away from the workplace.
They may not have compensated in cash (although surely some did), but they compensated elsewhere in the total compensation package. Benefits got better or salaries grew or vacation improved or 401K matches were introduced or etc etc.
As for insurance pools, what is stopping people from forming groups that can negotiate their own rates? If there is a law, why can it not be changed?
You should have both public and private options at the same time. In Spain you have a good public system but you also have a parallel private system. It keeps a check on the price rise of private insurance as people have the option. For a family of four I pay 300 EUR a month for the best plan. Most people pay about 180 EUR for four people.
Do you think that companies would give you a raise equivalent to what they were paying on your behalf for healthcare? I suspect not.
I mean, it's one thing if we moved to a single payer system, which would be great, but just moving out of the employer's hands and into the general public seems like a disaster. (Also, I am not a fan of the employer healthcare model.)
> Do you think that companies would give you a raise equivalent to what they were paying on your behalf for healthcare? I suspect not.
Its anecdotal, but my company and the company my mom works for, both already do this if you choose to opt out of the employer plan. Total compensation is not a foreign concept to most businesses.
Sure. But how many people know how much their employer is paying on their behalf, and could use that to effectively have the same earning power? I know I had no idea until the Affordable Care Act put it on my tax documents.
That depends on the details. I'm sure to have missed a many important details below (I doubt anyone even knows them all).
For an instant raise to happen: companies must not only lose their tax deductions on what they contribute to insurance, they also need to count that contribution to employee's wages even if the employee doesn't take it. As soon as young childless employees realize that they are paying taxes on what amounts to the insurance payments to their co-worker who has a lot of kids they will demand they get the cash.
Well, for one thing, the employers get to use pre tax money (up to a limit) for their spending while individuals have to use post tax money, so it would be at least 30% less.
that's a fair point, but which is easier for an employee to compare, wages between two companies or job offers when they buy their own insurance and know the cost, or to compare wages AND benefits of two different jobs/offers
It seems like a strange omission for this article not to mention that the reason health insurance is so expensive in the US is that health expenditures are so high. The US spends more than $10,000 per year per person on health care[1], more than any other country. Clearly, on average, premiums clearly must be higher than the amount paid out on behalf of the customer.
If you want lower premiums, you somehow need to lower the amount spent on health care. The problem is that, perversely, health insurance companies are incentivized to spend more on health care rather than less. By law, they must spend at least 80% of the money collected as premiums on health care costs[2]. The more they pay, the larger the 20% they are allowed to keep.
So if you want to reduce the cost of health insurance in the US, you need to reduce the cost of health care. If you want to reduce the cost of health care, you somehow need to change the incentives so that the big players benefit when the cost of health care goes down rather than up. Failing that, you need to change the system so those big players are no longer in control.
Only the latter option is a feasible solution. If you look at countries with mixed systems (like South Africa), a great deal of the cost savings disappear. Tim Faust has a great new book that breaks this down. Also, recommend his interview on the Death Panel podcast.
I would love if everyone that seems to be in support of a single player system would make a mental note right now that they were in support of it, and then years later after the US moves to such a system (seems pretty likely?) they review how much it helped.
I grew up in a single payer system and I'm theoretically in support of it for the many reasons people already listed in the comments (larger negotiation position, spreading the risk to more people, because it's humane, because it removes an incentive to stay in the wrong job, etc). But while I agree with those arguments I also have a strong conviction that if such a system were to be adopted in the US, it will NOT result in better care and more efficient and overall reduce the costs in the system. Not without many other changes in other laws and even cultural changes. Just because something works in Germany for example it doesn't mean it will work in the US, there are different demographics, different mentality, different service expectations, different tax system and a largely different legal and law system. Not to mention we were just discussing a few days back about the increasing national debt and this needs to be done without increasing the deficit.
I'm in the UK, and have unfortunately had all too much experience of the health care system here.
My view is that it's optimised for the majority, and for the "easy" things. For example, all the NHS endocrinologists I've seen have only really known about diabetes, the dieticians I've seen only really know about weight loss, the pain specialists I've seen have a narrow and fixed list of mess they prescribe, and the neurologists I've seen only really knew about... well, not much TBH. I can only guess it's because they're over-stretched and simply don't have time, but it's also been my experience that consultant's knowledge is way behind the times; almost like they haven't read a paper since they left medical school. Oh, and waiting list times are often ridiculous.
The NHS fails many, but I know helps far more than it fails, and if you have the money you have the option of private medical insurance or self-funding private medical care.
I'd still take our "sort of works for most people" system over that of the USA any day.
After a late night out, a man in an English town walks up to a traffic crossing at 2 AM. After waiting a couple minutes for the cross walk light to turn green, he looks both ways and notices no cars are coming. He turns to the man next to him and asks "So, you're German too?"
I feel like this simple joke highlights your point about some distinct cultural differences that allow a system to work in Germany that would utterly fail in America.
I see alot of the proposed solutions to the US healthcare system boil down to some form of "Medicare for all". I think a single payer system would be great and I am all for it.
That said, I doubt it would solve all the problems in the US healthcare system at this point. It seems to me the biggest one is that providers, i.e. doctors, hospitals and drug companies all bill way too much. I think it is just politically less palatable though to go after doctors than after a big anonymous insurance company.
I do remember when I had an appendix operation a few years ago and was billed $50,000 for it, including some gems such as $4,400/night just for the hospital room and $50 for 2 tylenol that the Walgreens down the road would sell you for $5 a 24-pack.
I know several doctor acquaintances making >$1m and even $2m a year - I know they get together regularly where they actually discuss techniques to bill their patients the most money. One dermatologist discovered that removing 2 skin lesions on the same day was a bad idea - he got paid about 50% less for the 2nd one that way. Sending the patient home and telling him to come back next week for the 2nd one would however double the bill. So that's what he does! More patient inconvenience and added expense - but who cares?
Everything in American society is done the way it is done because it's making someone very, very rich.
Healthcare. Education. Defence. Incarceration. Taxes. Bank Transfers. Telco. Roads. Infrastructure.
Patient convenience, Overall society happiness - whatever you want to talk about. It's a money machine. And the money is more important than the people.
I live in Canada and the government pays for healthcare but (or maybe 'therefore') the providers do all sorts of sleazy things to get more money like schedule separate billable in-person appointments for an STD test and the reading of the negative result of said test.
The real issue generally speaking is people with union negotiated healthcare tend to really like their health insurance because in at least certain cases, they're getting Cadillac plans that give them a one up on seeing the best doctors around, in addition to in certain cases paying less in premiums than they would be taxed for M4A.
The second piece is that M4A is a huge unknown, and so they'd want to keep their health insurance because they're afraid that what the government will offer will ultimately be worse.
The first point is certainly easy to address as that money would then likely be renegotiated to result in salary increases, but with regards to the second, what would stop a republican administration from doing things like, effectively banning abortion by refusing to pay doctors who perform them through executive order.
I like my health insurance in the sense that I am fairly confident that I will like my current health insurance better than the insurance I will have in five years. The same way that I liked the insurance I had five years ago better than the insurance I have today.
Basically I think no one expects it to get better, so they are just all hoping it doesn't continue to get worse (while expecting that it will).
That statement was a stumbling block in one of the recent Democratic debates. I have no idea why none of the candidates drive the point that insurance != doctor home(in most cases) .
Warren did, with a pretty decent line something like "I've talked to a lot of people about this and I'm not sure I've ever heard someone say they like their insurance. Their doctor? Their hospital? Sure, but not their insurance. People care about having access to the providers they like—they don't care about their insurance".
I had to tune out after that part of the debate. Watching a bunch of candidates, and especially the frontrunner, claim not that MFA was OK but their plan was better, but that MFA is some kind of impossible dream that can't work, just pissed me off too much. Screw them. Seriously.
I think most people doubt the cost increases, but personally I pay about 10x what I used to pay for worse coverage. My deductible and out of pocket max is higher now too.
It's worth pointing out that for the vast majority of people doctors != insurance. The payer is not the provider.
The refrain of "people like their health insurance" deliberately conflates the two. People like their doctors, not their insurance. Doctors accept multiple insurance companies.
And to top it off, old people (actual old people) are already using socialized medicine. They aren't using private insurance (or, if they are, it's used to cover coinsurance/deductibles).
I felt this is something that politicians say to two groups: the insurance companies and the "anti-socialism" libertarian crowd (who have injected themselves into the republican party).
I just got my renewal quote: $2,372/month for a family of 4 is going to $2,883/month. That's a ~20% increase, to $34,595 PER YEAR.
(And this is while benefits continue to be cut back: $150/month for many prescriptions, etc.)
As others have written, there's no single reason. But, I think there's a major unintended structural problem: under US law, insurance companies are required to pay a high percentage (like ~90%) of their premiums out to service providers. The intent is to cut administrative overhead.
The effect: it's very hard for an insurance company to invest in technology or administrative improvements. So, the status quo persists.
WORSE, the admin overhead is pushed onto the providers, so the overhead cost gets hidden. It's not uncommon for a family medicine general practitioner to have a back office of 3-5 people dealing with billing and insurance paperwork.
> WORSE, the admin overhead is pushed onto the providers, so the overhead cost gets hidden. It's not uncommon for a family medicine general practitioner to have a back office of 3-5 people dealing with billing and insurance paperwork.
My old doctor from when I was a baby till he retired had a practice with three to four other doctors. They had a nurse and one of the doctors wives did all the office work, billing, and answering phones. Current doctors practice has two doctors, four nurses, and eight office staff.
Old doctors office could would take x-rays and set a simple fracture. Or stitch up a simple cut. New doctor won't do any of that.
Insurance companies need to be expropriated. The entire thing needs a restructure from the ground up, there are too many critical path issues that will keep things expensive if we try to have two systems at once (medicare for all + private)
the US should get real medicare, then move to a public/private system where you get base coverage through medicare and pay extra for fancy coverage.
50 years of medical innovation leading to the propagation of procedures, medicines, and equipment costing upwards of tens of millions of dollars to procure and maintain.
Nobody is equipped to try to make an informed purchasing decision on if they want the $50k or $100k option to try to save their life while bleeding out of a gurney after getting hit by a car.
Oh yea, we're forgetting about the no insurance glory days of pre-WW1 medicine!
If your definition of "worked" is letting everybody die because most of modern medicine hadn't been invented yet, than sure, going back to those days would certainly drive down costs. No need for those expensive CT scan machines anymore, just rub some dirt on it.
The medical insurance industry is a free market. That's why it's such a disaster.
"Free markets" are certainly not free in any meaningful sense of the word. In practice they make no distinction between activities that provide customer value for a competitive price, and activities that are institutionalised economic extortion maintained by political lobbying and regulatory capture leveraged by plentiful access to capital.
The whole point of "free market" rhetoric in the US is to promote the latter while pretending to promote the former.
I think another thing about employer-based healthcare that few think about is that if you work for a large company then it is almost certainly self-insured, meaning that you or your employer is paying premiums into a fund that it is managing itself.
How crazy is it to think that not only does Apple or Ford or Trader Joe's need to manage it's own business but that it is also hiring actuaries/insurance specialists/consultants etc to manage a complex insurance program for all of its workers? I'm not sure many people that work at large companies realize that their employer knows every diagnosis, procedure, and prescription you've ever picked up, and actively trying to incentivize you to use as little healthcare as possible.
> also hiring actuaries/insurance specialists/consultants
What usually happens is that they pay a health insurer to "administer" the plan, or a "Third Party Administrator", which gains them access to all the actuarial stuff, as well as the provider discounts and negotiations, for a service fee, meaning the only effective difference is that your employer doesn't have its funds in a "pool" but can instead choose how much, or little to pay, from its own funding.
> I'm not sure many people that work at large companies realize that their employer knows every diagnosis, procedure, and prescription you've ever picked up, and actively trying to incentivize you to use as little healthcare as possible.
I work for such a company, and it's great. I pay about $30 per month for a plan with a tiny deductible ($2,500), and they offer great wellness perks like weekly classes (yoga, kick-boxing) in-office, partner with a local CSA that does a bi-weekly produce truck out in the parking lot. They do encourage folks to get yearly wellness screenings, and basic dental cleanings by increasing your plan by about $2 per week if you don't.
This is a single, no dependents rate. I believe the comprehensive plan, with families runs about $70 per month.
As it were, the plan is employer funded but we have some type of partnership with a major provider for administration so the employer itself isn't hiring actuaries / specialists / consultants. Perhaps your personal experiences differ here?
I don’t understand your comment. If the company is large it is likely self-funded, so it is taking on the risk, whether they are doing it in house or hiring a benefits consultant to do it for them.
I didn’t say anything about the quality of a self-funded plan, simply just pointing out that a self-funded plans means your relationship with your company is not merely just a worker but you morph into this insurance risk that they now have to actively manage. I am pointing out how strange it is to ask a company to have to do that, which is unlike any other country in the world.
> I don’t understand your comment. If the company is large it is likely self-funded, so it is taking on the risk, whether they are doing it in house or hiring a benefits consultant to do it for them.
Because they partner with a larger provider for the doctor / hospital / pharmacy networks and specialist support. This is a very common pattern insofar as I'm aware.
The network of providers available to you is a separate issue from whether your company manages the risk or an insurance company does. Didn’t mention anything about provider networks.
> The network of providers available to you is a separate issue from whether your company manages the risk or an insurance company does
What I'm saying is, my company manages the risk. We partner with a larger insurer company that provides A) network B) specialists for the roles you've claimed a company would normally hire. Because of this we don't have inside actuaries and specialists and such. As a result, there is no inside man looking at my claims.
I will ask for for a third time, have you experience that differs here?
What you’ve described is the self-insurance model for large companies. That doesn’t conflict with any of my earlier comments. Companies can decide whether they want to administer it internally or use a consultant.
You seem to believe that just because a company uses a consultant that no one in HR or Finance or management would be privy to viewing your claims history via the consultant? Not sure what would lead you to believe that. Just because your company is outsourcing the task doesn’t mean it is shielded from the data.
Wow. I work in a 30-40 person office. My plan, which is the nicest available to us, is ~$300/month. Deductible is $1.5k single and $3k family, and I don't have any nice wellness perks like you described. Overall, I hate this plan. It will be handy if I ever get hit by a car and need lots of pricey surgery, but otherwise not so much. The price will be going up about 15% next year.
Deductibles are weird. If you have kids, or are on medications, you don't think much about it, because you are in and out paying co-pays $25 here, $50 there, $100 somewhere else, and that boils the frog quickly.
If you are healthy and single, and have to get anything beyond a physical done, you get slammed paying the whole shebang out of pocket because you haven't put any money towards your deductible all year.
The greatest thing in health care over the past decade has been the explosion in Convenient MD urgent care centers and the like. It makes getting checked up when something needs to get checked up about as easy as going to Jiffy Lube, which is miles better than going to an ER or trying to thread the needle through the schedule for an appointment at your PCP.
Sharing this idea in order to gather critique.
The cost of healthcare in the USA is insane.
Could we look for insight into the US Military?
Example: This morning, a coworker told me she's going to have an operation on her back. The "cost of the tray" (I have no idea what this is) is $14,000. She has to pay $8,000 up-front two days before the operation, and the remainder will be financed over two years.
To me, it's insane to think the US Military pays $14,000 for this same operation in US Veterans' hospitals.
Why don't we look into the military to see how they're doing it?
Active duty military members do not get healthcare at the VA. The VA is reserved for veterans.
That said, as a recipient of VA healthcare I don’t pay a dime. Some vets do but I have a service-connected disability rating above the threshold for free healthcare for life. Prescriptions, ER visits, physical therapy, etc are all covered.
I have a friend who was a nurse at the VA who told me they loved working there because there’s never a hesitation to order a test due to insurance coverage. If my doctor feels that something is important, they order it.
Whether it’s migraine medication, PT due to some jaw issues or a vasectomy, they’re all covered for me.
There have been some complaints about VA service in the past but in the 10+ years I’ve been using them it’s been a breeze.
The insurance companies are for profit corporations who pay politicians so they can keep taking your money when you're healthy and cutting you when you're not. The army is not, as far as I know, a for profit enterprise.
Oh I'm sure the military doesn't pay that much. They get to leverage staff doctors, and negotiated rates. You know like other countries with single payer systems, etc. get.
People in the U.S. get screwed, because hospitals are businesses, and they know how much they can charge to make a profit. When a hospital has an entire legal arm just for suing people in court, because they aren't making their payments, you know something is wrong.
>When a hospital has an entire legal arm just for suing people in court, because they aren't making their payments, you know something is wrong.
A good example of this is the Ford Pinto and it’s exploding gas tanks after impact due to them being exposed. This resulted in multiple accidents and deaths. Ford later learned they could retrofit every Pinto sold for a total cost of $11 (in that years value) per Pinto. They decided not too because court costs per death would be less than the profit loss.
Without boring you with unnecessary details, it can be summed up as this: Does B < PL?
B = Burden of adequate precautions
P = probability that the defendants actions will result in an accident
L = Loss/Cost of accident if it occurred
When looking at hospitals, they understand the costs of hospitalizing someone for 3 days, 3 hours, or 3 years. They also know the costs of providing care to all of their patients without the thought of insurance companies reemburssing them. For them, the idea of shrinking profits in order to maximize care is not ideal. So, in this case, they will often charge insurance companies the maximum allowed, charged uninsuranced patients the maximum, etc. Why do they do this? Because for them, B<PL. The total cost of employing 10 lawyers to fight 100+ cases of defaulted medical bills or lobby for a new policy, that will still be less than the amount of profit they would lose if the hospital paid for all that care to begin with.
isn't the problem actually that there is no limit on what they can charge? if i have an accident they won't ask me if i agree on the price, they just charge me while i'm unconscious. i don't get to negotiate prices and the ambulance will take me to the closest hospital, not the cheapest for me.
not only that... your healthcare provider has contracts with the insurance company and the insurance company can actually block you from simply paying cash for services.
In no other country is your healthcare tied to your employment but the US. Germany has had a national healthcare system since around 1880 (after the country was unified, based on what Krupp did for their employees). Why is the US the outlier (also in cost per capita)?
Even at famously generous employers they will try very hard to push you towards high deductible plans by giving you 1-2 thousand extra dollars per year in your HSA. Of course the high deductible plans discourage you from seeking care so it saves your employer peanuts it can add to its war chest in Ireland
Some of this probably has its roots in the ACA adding extra taxes onto “Cadillac insurance plans” though which I didn’t even learn about until recently. Yes, apparently you may need to pay extra taxes for extra good insurance
I manage a health plan for our smallish business of 19 employees. We offer "pretty good" health insurance, meaning, we pay around $600 per employee per month for health and dental. It gets worse every year. I am considering moving toward a HSA based plan, because upon analysis, it's actually probably better for everyone involved. The max out of pocket per year is the same, but instead of a $1000 deductible you have a $5k deductible. This works for our business (and I am assuming a bunch of other tech businesses) because our employees are generally young and in good health. It's a cheaper plan, the worst case scenario for an employee is the same, and I can give raises for the difference in price, and once every few years someone will need more than a $1k deductible, but the raise from the last couple years greatly exceeds the one time cost.
Anyway, just trying to frame my logic here, because I don't consider myself an evil employer trying to skimp on health insurance for my employees (which many I consider friends), but an employer that has to approve health plan changes annually which each increase cost by a considerable amount. If this trend continues, each employee will cost $900 a month within 5 years, and the coverage will be half as good. That's $5k a year per employee that I could put into their salaries, while not screwing anyone over on the worst case scenario.
From my perspective, I am unlikely to hit the out of pocket maximum but quite likely to spend more than $1k/year. All the high deductible does is discourage you from seeking care for things before they become serious. Not sure how it worked from the employer’s end, but $5k/year will get taxed at roughly 50% before I see it so it’s not clear whether that will be greater than my out of pocket costs
The missing link here is premium savings. HDHP plans exchange higher deductibles for a nontrivial premium discount. Insurance companies like to assure employers that employees will bank this discount into a tax-advantaged HSA. So the theory goes, a reasonably healthy subscriber will have sufficient savings to meet their deductible.
This falls apart in practice when employees, who are already spread thin financially, elect an HDHP but can't or won't set aside cash to cover expenses.
Late to reply, sorry. Yes there are ups and downs, but you can setup automatic deductions from paychecks straight into an HSA. I haven't done the full analysis and asked everyone at work, but if the trend continues for the next few years it's going to be really hard for a high deductible HSA plan to not come out ahead. Whether or not we eat the extra cost to keep the convenience will be a decision to be made then.
My comment was only to serve as counterpoint that companies aren't all looking at an HSA because they want to screw people over. Many are looking at an HSA based health plan because they are increasingly becoming more attractive as benefits shrink while becoming more expensive. Again, I am friends with my coworkers, my family is on the same health plan, and I have everyone's best interest in mind, and I wouldn't approach the decision lightly. Obviously there are shitty people out there managing employer plans, I don't speak for them!
The Cadillac insurance plan tax has never gone into effect and has been pushed back a few times now, and truthfully is unlikely to ever be implemented.
This said, the tax on these sorts of plans are absolutely necessary with regard to controlling costs within the system, as cadillac plans which pay providers more for care, give them increasing amounts of leverage to demand payout increases from every other cheaper insurance plan.
There are a ton of hidden taxes tacked onto ACA but everyone I know with a marketplace plan hates theirs. I'm really not sure where that money is going.
There aren't many industries where price shopping is as hard as healthcare. When you remove the cost of a good so far from the actual beneficiary costs become incredibly hard to control.
Not many here will remember when the insurance markets started in the US, but the original deal was that people pool their resources and get a discount vs street rates. However now that everyone is pooled, what possible metric can you use to determine if you are actually getting a good deal?
Sure, we hear stories of outrageous bills that are sent to patients that their health insurance "covers". However, the reality is the insurance company expects a discount which has caused an opposite effect to uninsured patients. Costs go up so that the "deal" the insurance company gets looks good. All the stories about $20 pill of Advil, is all pointing to the leverage hospitals and doctors used to fight cost cutting at insurance providers.
I think there are only two ways to resolve this at this point. Build a free market solution where price transparency is required and make it easier to shop for non-emergency care, while the government continues to cover emergency visits or full single payer healthcare with the government footing the bill.
Based on the moral logic that many U.S. citizens see healthcare and life savings services as fundamental right, I think we inevitably will need a single payer system in the US. I know the desire is to see something federally mandated but I am quite surprised that not one state has taken up the idea of single payer and made it a system available to all residence who prove they have resided in their state at least X days. I'd like to see the different solutions presented in each state and let the state with the best healthcare solution win and eventually become federal.
The U.S. is supposed to be immune to this in principal due to the nature of states being test beds of policy. The only reason this is happening in all states is because of federal policy that has destroyed the ability of states to experiment in this area.
When you ask for zero risk, you are asking for infinite cost.
My last reading of their work was years ago, but at the time the study found that folks will use fewer health resources when on a high deductible plan. However--the study allowed folks to revert to their old insurance (i.e., lower cost insurance) if they got sick. Meaning the study would show those in high-deductible plan would use fewer resources only because the people in that plan who used more resources quit the study.
The entire health insurance industry makes ~$25B in profits a year, correct? That doesn't seem overly large considering it is the entire insurance industry.
It’s not only profit. They also cause a lot of administrative overhead. For example if doctors had to deal only with one insurer or at least one coding system they wouldn’t need four billing assistants as I have seen. In essence insurance companies do a lot of unnecessary stuff. Their profit is only a small part of that cost.
There are two coding systems (ICD - for diseases, and CPT for procedures) that are mandated to use by medicare/medicaid and all the insurance companies use them as well. Most of them even accept the same forms. They need those billing assistants for other reasons.
”They need those billing assistants for other reasons.”
Whatever it is they do exactly it deals with insurance companies. Germany also has private doctors but they have much smaller staff and dealings with insurance are very straightforward. American insurance companies cause a lot of friction. I don’t know exactly why but they do.
Insurance companies are mainly trying to combat fraud. They kick back claims if they are formatted wrong (why did you code an operation on the left knee when the right knee was the problem), or they deem that the work done was improper, unnecessary or does not fit the standard of care. Billing staff also handle accounts receivable and collections.
The biggest problem IMO is how we structure payment for health services in the USA. The fee for service model is highly inefficient and disincentivizes preventative care. All of the current proposals for universal healthcare do not address this fundamental problem, and so long as this remains in place we will continue to have the highest costs in the world. (disclosure, I am working to try and solve this problem)
If you were to pick countries to emulate, I would pick Singapore, Japan, the Netherlands, and Switzerland instead of Canada and the U.K.
Much of the administrative stuff insurers do to prevent healthcare providers from doing unnecessary stuff. In a taxpayer funded system, there would still have to be an entity to double check healthcare providers’ billing.
> According to the Kaiser Family Foundation, administrative costs in Medicare are only about 2 percent of operating expenditures. Defenders of the insurance industry estimate administrative costs as 17 percent of revenue.
Yes, I agree. I don’t see why Medicare should only apply to those 65+. But until it applies to everyone, insurance companies have to serve that purpose. I worded it confusingly, but I meant to imply that insurance companies’ work is not all waste, since they’re doing a task that someone has to do, even if all healthcare was taxpayer funded.
We don't need to argue what hypothetical shareholders would do, we have hard facts that health insurance CEOs are getting paid billions, and receiving yearly pay increases that outpace most Americans[1].
And another 9% of their revenues is for useless administration (relative to a single payer system). They estimate that if administration and premiums get cut (and thus no profits) as a result of a single payer system, then we would save $615B per year.
The money isn't being pissed away into insurance industry profits.
It's being pissed away when the hospital, and the insurer spend 2 hours arguing over how to bill a $500 procedure. Net cost? $640. $500 for the procedure, $35/hr * 4 hours for the paper-pushers.
Net benefit to the patient? Minus $100, out of their premiums. Would you like to pay cash, or discuss with us a financing plan?
It's being pissed away when the hospital buys bus ads, and the insurer buys superbowl ads. I've not seen a single hospital ad in Canada... Because the hospitals weren't competing for my business.
It's being pissed away when a hospital tries to sneak in a $100 bill for two aspirins, and justifies it by citing how much they spend on charitable care. (Hint: That charitable care is the hospital writing off some other poor bastard's $100 bill for two aspirins.)
I think you missed a zero. About $80 per citizen. Still a negligible part of premiums though.
The problem with health insurers isn't their profits (though that's a popular political talking point), but rather it is the part they've played in creating/enabling all the inefficiency in the current bureaucracy.
Definitely feeling this during my company's health insurance renewal this year. I used to think that I had it pretty alright, but over the past few years, things have gotten worse and worse. This year, for our "gold" plan, which was sold as the equivalent of the previous year's "gold" plan, our insurance provider increased our monthly cost by approx $120/mo, and increased our deductible by $5,000, up to $15,000.
I used to be against single payer, but now I'm rooting for any politician that thinks they can pull it off. I'm willing to pay a bit more tax in exchange for no longer having the "best" health insurance plan that I can afford that, quite frankly, I am terrified to use. Health care costs in this country are completely out of control. We need to have the system burned down and rebooted.
The American health insurance system is not insurance--it's a long-term payment plan. Why does insurance need to get billed when I go for a yearly checkup with my doc, or when I pick up some prescription-strength ibuprofen? My auto insurance company doesn't get billed when I get the oil changed in my truck. My homeowners insurance company doesn't get billed when I have to recharge the refrigerant in my heat pump. The insurance companies have taken all the monetary interactions between clinics and patients away, except for the (oftentimes criminal) balance billing that occurs when your claim was denied for some ass-hat reason like "You didn't tell your insurance company whether or not you had other insurance."
Congress limits the number of medical school students, thus limiting the supply of doctors.
You see all kinds of programs to introduce more STEM or coding camps into public schools. But you won't see schools encourage more doctors. Why? Because of special interest groups.
The healthcare system has become a symbiotic relationship where providers and insurance companies work together to funnel money from just about every business in the US into their pockets.
Hospitals increase staff to justify billing more, then insurance companies use increased costs to justify raising rates. Internally, hospitals and insurance companies are also in a tug of war over their slice of the pie. These conflicts introduce even more people-hours into the treatment of patients, in the form of revenue cycle managers, lawyers, medical coders, etc.
Each new layer added to the cost onion of healthcare results in the pie growing, since most insurance providers can only take in some percentage of what is spent. So they need to spend more to make more.
Incentives. There is no incentive for a doctor that sees a patient to provide a favorable outcome for the patient. Whether the patient stays sick or not, the doctor still gets paid. But here's the kicker: The doctor gets paid even more if the patient has to come back. The payments come from the insurance company.
Take this concept to the level of a very large health care network (but non-HMO). Patient has early signs of serious but uncommon condition, goes to doctor. Doctor checks for common, obvious things. Finds non-specific symptoms, refers patient to a specialist or three, and the patient is diagnosed with "Not-My-Problemitis".
Disease progresses and the patient is now able to tell the majority of the symptoms are vascular in nature, not muscle or bone as previously thought. More referrals are given. The specialist orders a battery of tests, but they yield false negatives as the symptoms are not occurring at the time of the test, and the patient was not advised that the symptoms needed to be occurring during the test for it to be valid. Patient is again diagnosed with "Not-My-Problemitis" and possibly referred to a research institute, where they'll have quite a long wait time.
By this point, the patient may have lost their employment due to the frequent sick time and time off for appointments, and generally being frustrated in general. They can qualify for Medicaid but will have to start the process over again, but much slower as providers have to tread carefully with care received under Medicaid supervision, as if they were treading on thin ice. But oops, the patient has now gone into critical condition and is sent to the ICU, which is statistically likely to be owned by the same health organization that had their hands involved in the patient's earlier care.
Due to the patient's hospital visit, regardless of whether the patient survives, a payout of Six or even Seven figures is rewarded. Ka-Ching! Insurance companies are hesitant to deny those kinds of claims now, if they involve life or death. Too much bad PR. Thanks, Michael Moore! Of course, it doesn't work out as well for the hospital if the patient had lost their job and is back on Medicare, as there isn't much profit to be made there, if any. That's just the collateral cost of doing business.
I would like some evidence of this. I've read and heard many people confidently pin the high cost of health care on: too much administration, greedy doctors, undocumented immigrants, over use of tests, over prescription of drugs, too much paperwork causing inefficiency, and probably others I'm forgetting. They can't all be the primary cause.
[ and before someone replies, it is a mix of those, of course ]
In competitive markets, competition will keep costs and profits from ballooning.
What kind of market conditions are required for spending to increase in all sorts of directions? I can immediately point to education as an example where both lenders and colleges both have a vested interest in growing eachother's businesses, paid for by the customer.
This is the first year I have had to really utilize my healthcare coverage to its fullest due to a cancer diagnosis in my family. I work at a very small company doing its best to provide a decent healthcare plan, but with our numbers we have very high monthly premiums plus a high out-of-pocket maximum for me to reach (which will now likely happen every year).
I can't help but wonder if I am paying WAY more with my current healthcare plan than if I didn't have any insurance at all and negotiated the "uninsured" price per each service myself.
They really should offer the employee the option to take the benefit in cash instead of getting the health insurance then you could barter with the healthcare centers. The health insurance and healthcare centers(hospitals/clinics) are a cartel and the only way to bring down prices is through competition and that doesn't happen when you give an arbitrary amount of your paycheck to a clandestine insurance agency that has dubious relationships with the hospitals.
Because you can’t buy true insurance. You are buying a combination of prepaid healthcare - often including things you don’t need - with some insurance features attached.
Does anyone know the extent to which this is happening faster or slower than the background increase of medical care costs? I know that historically medical care costs have been outpacing inflation. So it's not altogether surprising that, in an unsubsidized environment, the costs to the end-user of that care would also increase, by roughly the same amount.
Where I work (in the USA), we have an employer-paid plan. There are no weekly premiums paid by the employees. There's a minimal deductible, around $500-1500 maximum per year.
The employer gets the bills, they pay them. They belong to a cooperative and get negotiated rates, they have a provider network and everything.
Stop getting sick and having to use the healthcare system. So no, not really, unless we change our living habits as a civilization, but then we get old anyway.
Even though I seem weirdly unable to get sick, and I've been to a doctor once in 15 years (just to get a note! required by other insurance), I still have to pay unfunny premiums. So being super healthy still doesn't help.
AND YET if everyone in aggregate used less healthcare, I bet it would do more to move the needle than anything a politican plans. Americans are deeply, deeply unhealthy and I wish I could convince them all to eat better. To me it is just wild that so many people complain about non-insurance healthcare costs but do not want to invest in better food/behaviors for themselves.
I'm a lot less salty because the money I pay is being used to treat everyone who gets sick, including poorer and older relatives and neighbours, and nobody looses their house and life due to healthcare costs.
Even if you pay a lot (because you can, with high income) there is a clear benefit for the people around you, not just cooperations. Basically, everyone around you is safe, and that's a good feeling.
Hm, 7100 USD for a single person seems pretty affordable. Sounds to me like the US healthcare system is a lot more affordable than they made us believe.
In Germany, with my income level, I pay about 17000 EUR (roughly 18600 USD) per year (of which my employer pays 50%).
Our healthcare system is so wildly (and increasingly) inefficient, I don't doubt there will be a breaking point when politicians will finally be forced to nationalize it. Let it keep getting worse. Let them see the bed they're making.
Replying to both (am the original questioner, and thanks for the answers) I'm a brit and to be precise, the NHS is free at point of use, not free. Just to be clear.
It's also now underfunded, but it's still a system I'll literally fight for.
And here I was expecting that an environment that suppresses price information and and eliminates competitive pressure would just get cheaper and better over time.
Yes, it is possible. Our health insurance is only slightly less expensive, though (and can only be paid with post-tax money). We hold the proud second place in healthcare costs.
You’ll also have some issues with opening a bank account here — Swiss banks are not particularly fond of US customers, because of reasons.
You can get permanent residency in Canada within 6 months via Express Entry, unless there's something you're particularly looking for in Switzerland you won't find in Vancouver ;) [1] You can then apply for citizenship after having lived there for 3 years out of the most recent 5.
No, Americans have a long and deeply embedded tap root so they die if they are pulled up.
Nope, sorry, I'm thinking of turnips. Easy mistake.
Yes you can move I guess.
Alternatively perhaps you can give some aggro to your representative and make a public noise so this horrible system you appear to have gets fixed. Bonus: you get to stay in your own country and make things better for everyone else there as well.
What makes health insurance cheaper is a larger pool of people. There is no other mechanism by which costs can be reduced.
This is why a single payer system is dramatically cheaper. It ensures complete coverage, reducing the cost of insurance to it's minimum. Furthermore, it leverages the collective bargaining power of all subscribers.
There is no substitute for a national health insurance, and the United States slowly bleeds money, time, and health outcomes every day we continue with our current state.
What makes health insurance cheaper is not paying for as many expensive operations per capita. While there are a host of factors making US health insurance expensive, the critical factor since 2008 is laws: laws which require that the insurance cover patients who will have very expensive operations, and do so at the same rates as other patients.
The primary advantage of a national health insurance scheme is that it can ration its care for expensive operations, and people won't be able to yell "Greed, greed!" at insurance companies as a scapegoat (ignoring that the profit margins sit at about 4%, which is not exactly the sort of health insurance savings that would fix anything).
There is little evidence to support the "US consumes too much healthcare" narrative and some good evidence that our total healthcare spending is inline with our level of wealth [0]. There is quite a bit of evidence to support the "Prices for equivalent healthcare are significantly higher in the US".
That doesn't necessarily follow. Whether or not it gets cheaper or more expensive depends on how likely the new people are to get sick compared to the other people in the pool. Adding a bunch of sick people raises the costs for everyone, adding a bunch of healthy, young people (and making them pay) lowers the costs for everyone else.
I agree that at this point, we'd be far better off with a single payer system, but it's certainly not cheaper for everyone.
> Adding a bunch of sick people raises the costs for everyone
Sick people without health insurance still get healthcare. They just don't pay, go bankrupt, probably cost the system way more than if they had preventative care paid for. Then they get a medical bankruptcy, the hospital eats the cost but raises prices on everyone else to stay afloat. Now, they might have a higher mortality rate and so end up not costing as much as if they had insurance from the beginning, but I think a large amount of the cost of the uninsured is already priced in.
I agree with all of this, which is why I said I think a single payer system is the best way to go, but the parent mentioned insurance being cheaper, which it would not be.
The total cost of the whole system is lower per capita when everyone participates, but the cost to certain participants is much higher, depending on what the system looked like before.
Yep, it certainly does. Single-payer and socialized systems are cheaper for a lot of reasons:
(1) Purchasing power of a large, single negotiating entity to reduce the cost of drugs (that's how Canada does it, and the US' solution was to allow importation of Canadian drugs, which, uh, seems circuitous).
(2) No marketing expenses, no executive compensation, no claims denials, no billing, etc. This amounts to 15-20% of all healthcare spending in the US [1] -- so an instant 20% reduction right there.
(3) National ability to set compensation, so you can reduce the cost of physician services too, as they're now public servants. Canadian doctors still make mid-6-figure salaries, and frankly, I'm okay with that.
(4) Complete pricing transparency. Wanna know how much medical care costs in Ontario? It's all right here in one big PDF [2]. PET scan for Thyroid cancer? J702. $237.50 CAD.
(5) Improved balance sheets and lower operating costs for corporations who now no longer have to deal with the medical care of their employees for no rational reason. Improved competitiveness of small businesses vs larger ones where small businesses need to offer medical care for competitive reasons and it represents a disproportionate burden.
(6) People can take the risk of starting businesses without fear of death due to lack of medical care.
The list of benefits goes on and on. It's time to take action.
My understanding is that the issue is payment is so divorced at this point from services rendered that there is no pressure to lower costs anywhere.
Hospitals pass their costs along to the insurance companies and insurance companies pass those costs along to individuals, and everything that happens in the middle is so convoluted that the average person can't make heads or tails of it to push back.
I think Warren said it right in the last debate I also have never met anyone who likes their health insurance. Medicare for all is supported by 72% of people according to polls. I think it is time we go for it.
I was just thinking the other day. Every job I've had has offered health insurance through the state BCBS. Those plans are ways a little over $100/m (for a single worker)
Meanwhile, I've had people brag to me about paying $10/ for damn to near full coverage. I'm starting to wonder if BCBS employer plans are just garbage
The average health insurance monthly premium for individuals is a couple hundred dollars ($321 in 2017 per https://www.cnbc.com/2017/06/23/heres-how-much-the-average-a... ; it'll be higher now). $10 or $100/month both mean the employer is chipping in a bunch, they're subsidized via the exchange due to low income, or they've got absolutely garbage coverage that won't actually pay for anything significant.
This is why the linkage to employers for coverage is so insidious - it hides the true cost of the system in lowered salaries. People look at an unsubsidized exchange plan like mine, with its $2,144/month premiums, and go "holy shit, I only pay $10/month for mine at work, that's horrible!"
I was just looking up individual insurance rates the other day. You can probably find health insurance for $321/mo, and really don't cover all that much outside of catastrophic problems. If you want decent coverage you're looking at $600-$1000+/mo.
My wife just took a job at a place that has a 'good' health insurance plan.
If she opted into it, her contribution would be ~$300/month, her employer's contribution would be $900/month.
If she wanted to cover me with it, her contribution would be $1,500/month, and her employer's would be $900/month.
Unsurprisingly, we did not take advantage of this, and she remains on my insurance (Since my employer handles 90% of the premium for both of us.)
When we were still dating, I had a good look at what the $300/month health plans provided. Absolutely flippin nothing. Deductibles of $8,000/year, and co-pays of 25%. If all you can afford is a $300/month plan, there's no way in hell you can afford an $8,000/year + 25% medical bill.
Meanwhile, Canada provides universal healthcare for $5,200 USD/year/person, with similar health outcomes.
Edit: fixed a typo in the employer's contribution.
Coinsurance is paid only until the out of pocket maximum is met, no?
I have a plan on the state exchange for around $300/month and an out of pocket max around $8k (I'm 34 years old).
I just budget $12k/year for healthcare and move on. This seems reasonable for people who can afford to take the risk of potentially having to pay anywhere from $4-12k/year.
In a lot of instances, the employers subsidize some or all of the premiums. BCBS has a lot of different plan structures too, depending on the size of the organization or association involved in purchasing the policies.
Open the market. Liberalize the selling and buying of healing goods and services. Abolish patents. You can even keep some certification of ability and quality, as long as they're on point (no 6 years training for stitches), specific, free and unlimited in number.
Put current psychopats behind the medical industry under death penalty as a warning for future generations. Seems harsh but they killed hundreds of thousands, maybe millions, and all for unjust profit. They deserve it.
80% cancers cured in max 20 years. No more threads on hacker news about people going around like dogs begging for a decent diagnosys. Stem cells for every need at costco, top quality. Problem solved.
So many healthcare deniers in this thread. This is, what, the second or third presidential election we've had where the central debate is about the skyrocketing cost of healthcare? Government healthcare has been shown to work in multiple other countries with lower costs, but I guess we can't let facts get in the way of HURF DURF SOCIALBISM HURF DURF.
If only your local MD could cure criminal stupidity.
I'm upset that the democratic party has been increasingly more focused on social issues than worker issues in the last decade. Once neither political party cares about the working man then you'll start to see unregulated capitalism like whats happening with healthcare/insurance costs.
The republicans are starting to care more (or at least pay lip service) for the working person but neither party is fully committed.
Maybe things would be better if people paid for their own health care? Having workers pay for their own healthcare along with the healthcare of those who are unwilling/unable to work just means that things are going to be expensive for workers.
Because medicine isn't paid for as a government-provided service. Insurance companies exist to profit - they defer risk. It is not a public service. I have a pre-existing condition, and I have a very mild case of Cystic Fibrosis: my healthcare at market costs about $500k a year. There's a lot of nuance to how much insurance companies actually pay out, etc, but looking at it in a simplified manner, it takes 25 families at $20k in premiums a year (with no claims to pay out) for them to break even on one of me.
tl;dr Health insurance is a for profit product, not a public service.
Marketing, claims denial, billing and executive compensation budgets that together amount for 20% of the expenditure of an average US insurer after they were legally capped to that level.
Even eliminating those expenses doesn't really help much. It just changes the numbers in the headlines. $16k in premiums is still tough for most US families.
It’s still $0.6 trillion dollars saved per year, and a solid place to start. There’s all sorts of other places that a socialized system saves of course. This would at least make the US no longer far and away the worlds worst.
Bringing everyone under a single umbrella should reduce everyone’s cost of coverage to the per capita cost, $10K (now $8K after savings). Then as a progressive tax system yields costs that scale according to your income the least able to afford it pay much less than that and the most able pay much more. Done and done. This is what the rest of the world does, no new ground is being broken here.
That's weird because in every other OECD country that offers "free" healthcare (as in, single-payer or two-tier with national option) it's dramatically cheaper and has much better outcomes [1]. Reality doesn't line up with your pre-conceived notions.
What do the obesity rates look like in those countries? You cannot compare a country like Sweden or Finland to the United States when they have completely dissimilar obesity rates, the main driving force behind healthcare costs.
If you’re solely using obesity as a comparison point Canada is just slightly behind in obesity but health costs are one half. The NHS while strained costs one third of what the US system costs. You could add the per capita spending of the NHS and Canada together and just barely be in the same league as the US incredibly inefficiency system.
Y’all better be hella fat if that’s the justification you’re using.
This. Spreading the cost of something that's getting increasingly more expensive across the populace doesn't solve the fundamental factors that are causing that thing to become more expensive in the first place. It also removes the incentives to fix the underlying issues.
Those countries are smaller and most likely have more functional governments than the United States. Having a dysfunctional government is a feature, not a bug, but it does mean that the national government would do a bad job running the health care system.
Germany's nearly 90 million people. What about a 90 million person health system can't be done with 300 million? At what point does this magical impossibility kick in?
Having just visited the EU I can tell you the working folks in those socialist countries are pissed they have to support immigrants who arent contributing.
I'm not saying that health care _could_ be exactly like grocery stores, with many alternatives, transparent pricing, and customers making the final decisions, but that it would have to be much _more_ like grocery stores to call it a free market. What we are working with now is just a system of pricing cartels supported by fear and lobbying. It needs to go.